Isabella Carter
Andrew Jackson's fight with the Second Bank of the United States, also known as the Bank War, was a constitutional issue because Jackson believed that Congress did not have the constitutional authority to create it. Despite the Supreme Court ruling that the Bank was constitutional, Jackson continued to challenge its charter on constitutional grounds, arguing that the Constitution does not explicitly grant Congress the power to establish a national bank. Jackson's opposition to the Bank was rooted in his belief that it was corrupt and served only the interests of the wealthy and powerful, threatening states' rights and individual liberty.
| Characteristics | Values |
|---|---|
| Jackson's objection to the Bank's existence | The Bank fueled wealth for the few and was in service only to the country's elite |
| Jackson's stance on the constitutional authority of Congress | Congress did not have the constitutional authority to create the Bank |
| Jackson's view on the role of government institutions | If any government institution became too powerful, it stood as a direct threat to states' rights and individual liberty |
| Jackson's view on the Bank's constitutionality | The Bank was unconstitutional |
| Supreme Court's view on the Bank's constitutionality | The Bank was constitutional |
| Jackson's supporters' view on the Bank | The Bank was corrupt and monstrous |
| Jackson's view on the Bank's shareholders | The rich and powerful bent the acts of the government to their selfish purposes |
| Jackson's view on the role of banks | Banks served a northeastern aristocracy |
| Jackson's view on the role of the President | The President has the right to interpret the Constitution as do Congress and the Supreme Court |
| Jackson's supporters' view on the Bank's future | The Bank's future was a losing fight |
| Jackson's actions against the Bank | Vetoed the bill rechartering the Bank, removed all federal funds from the Bank |
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What You'll Learn
Jackson's belief that Congress lacked the authority to create the Bank
Andrew Jackson's fight with the bank was a constitutional issue because he believed that Congress did not have the authority to create the Bank of the United States. Jackson's position was that the Bank was "corrupt" and "monstrous", and that it held too much power, which could be wielded at any moment to ruin the U.S. economy.
Jackson's opposition to the Bank was also influenced by his general distrust of banks and his fear that any government institution, if given too much power, would become a direct threat to states' rights and individual liberty. He wanted to challenge the precedent of the Bank's constitutionality, as decided by previous Congresses, presidents, and the Supreme Court. Jackson's supporters, including Senator Thomas Hart Benton of Missouri, shared his beliefs and launched attacks against the Bank, denouncing it as a "moneyed tribunal".
The debate over Congress's authority to create a national bank has a long history. During the final days of the Constitutional Convention in 1787, the idea of explicitly granting Congress the ability to grant charters to corporations (including banks) was rejected. However, earlier in the Convention, the delegates granted Congress the power "to coin money [and] regulate the value thereof", leaving the door open to the possibility of a central bank. Despite this uncertainty, Congress chartered central banks in 1791 and 1816, leading to the creation of the Second Bank of the United States in 1816.
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The Supreme Court's ruling on the Bank's constitutionality
The Supreme Court's ruling on the constitutionality of the Bank of the United States was a significant moment in the country's history, with far-reaching implications.
The Second Bank of the United States, established in 1817, operated primarily as a private corporation. Despite the important role banks played in the US economy, President Andrew Jackson believed that the Bank of the United States held too much power and posed a threat to states' rights and individual liberty. He argued that Congress did not have the constitutional authority to create it, and that it was a monopoly insulated from competition with state banks. Jackson also questioned the Supreme Court's decision in McCulloch v. Maryland, asserting that each branch of government had the ability to interpret the Constitution for itself.
In his second annual address to Congress on December 7, 1830, Jackson publicly stated his constitutional objections to the Bank, calling for a substitute national bank that would be wholly public and not engage in lending or land purchasing. This set the stage for a clash between Jackson and pro-Bank forces, who began formulating a recharter strategy. Despite Jackson's predictions, Bank President Nicholas Biddle, with encouragement from anti-Jackson politicians, petitioned for an early recharter in 1832, before the charter's expiration in 1836.
The recharter bill passed in both houses of Congress, but on July 10, 1832, Jackson issued his veto message, a significant moment in his presidency. He outlined his reasons for the veto, including his belief that the rich and powerful bent the acts of government to their selfish purposes, and that the Bank contributed to economic inequality. Jackson's veto message was crafted with the help of Attorney General Roger Taney and Kitchen Cabinet member Amos Kendall, and it sent a strong signal to pro-Bank forces.
The Supreme Court, however, ruled that the Bank was constitutional, establishing the doctrine of implied powers. This decision sparked outcry from state bankers, who felt the federal government had unfairly encroached on their industry by granting tax exemptions to the Bank. The financial panic of 1819 further intensified opposition to the banking system, as small businesses and farmers suffered due to the Bank's actions during the crisis.
Jackson's victory over the Bank ultimately crippled central banking in the United States until the creation of the Federal Reserve in the early 20th century. While his actions extended the meaning of American democracy beyond merchants and bankers, they also contributed to the Panic of 1837, worsening economic conditions.
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Jackson's veto of the Bank's charter
In 1832, Andrew Jackson vetoed the re-authorisation of the twenty-year charter of the Second Bank of the United States, which was due to expire in 1836. Jackson's veto was a significant event, possibly one of the most important in any presidency, and was the first step in a multi-year process to "kill" the Bank.
The Bank's president, Nicholas Biddle, had submitted an application for the renewal of the charter four years early, intending to pressure Jackson into making a decision before the 1832 election, in which he would face Senator Henry Clay of Kentucky. Jackson's veto message was a polemical declaration of the social philosophy of the Jacksonian movement, pitting "the planters, the farmers, the mechanic and the laborer" against the "monied interest", benefiting the wealthy at the expense of the common people.
Jackson argued that the charter was incompatible with "justice", "sound policy", and the Constitution. He believed that the Bank's exclusive privilege of banking under the authority of the General Government, along with its stock value, gave its stockholders, who were mostly "foreigners" and the country's "opulent citizens", a promise of wealth and power not accessible to other citizens. Jackson suggested that it would be fairer to most Americans to create a wholly government-owned bank instead, or to auction the Bank's monopoly privileges.
Jackson's veto and the decreasing likelihood of obtaining a new federal charter meant that the Bank would have to wind up its affairs. In response, Biddle severely restricted loans to raise public anger, which, along with Jackson's veto of the Bank charter and the removal of federal deposits to state banks, worsened the Panic of 1837.
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Jackson's view of the Bank as a threat to states' rights
Andrew Jackson's opposition to the Second Bank of the United States was based on his belief that the institution violated states' rights and threatened individual liberty. Jackson argued that the Constitution did not grant Congress the power to create a national bank, and that it held too much power, which could be wielded to ruin the US economy.
Jackson's opposition to the Bank was also influenced by his belief in states' rights and his interpretation of the Constitution. He claimed that the President had the right to interpret the Constitution, just as Congress and the Supreme Court did. This belief led him to challenge the Supreme Court's ruling that the Bank was constitutional. Jackson's view of the Bank as a threat to states' rights was also influenced by his political stance. He believed that a federal institution, such as the Bank, trampled on states' rights and served a northeastern aristocracy.
The Bank's president, Nicholas Biddle, disagreed with Jackson's view, arguing that the Bank had the right to operate independently from Congress and the Executive. Despite Biddle's efforts, Jackson successfully vetoed the Bank's charter, removing federal deposits to state banks, and tightening the monetary supply. This action by Jackson contributed to the Panic of 1837, which resulted in mixed reviews from historians.
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The Bank's role in the American economy
Banks are critical to the modern economy. They are the primary suppliers of credit, providing money for people to buy cars and homes and for businesses to buy equipment, expand their operations, and meet their payrolls. Banks also provide depositors with a safe place to keep their money and to earn some interest on it. They facilitate all kinds of everyday transactions through credit cards, debit cards, and checking accounts. They also help drive e-commerce, where cash is of little use.
The banking sector is also a major employer. In 2022, FDIC-insured commercial banks alone employed nearly 2 million people in the United States. Banks are also a critical intermediary in the payment system, which helps an economy exchange goods and services for money or other financial assets. They lower transaction costs and act as financial intermediaries, bringing savers and borrowers together. They also play a key role in the creation of money.
In the United States, banks are regulated by federal and state agencies, depending on the type of bank. The sector also self-regulates through actions of organizations such as the Financial Services Forum and the Financial Services Roundtable. Federal regulators include the Federal Reserve System, the Office of the Comptroller of the Currency, and the FDIC.
Andrew Jackson, the seventh president of the United States, distrusted banks and believed that the Bank of the United States held too much power and could ruin the U.S. economy. Jackson's fight with the Bank of the United States was a constitutional issue because he believed that Congress did not have the authority to create it. He also believed that the Bank fueled wealth for a few and was an engine of aristocracy. Jackson's opponents, on the other hand, argued that the Bank was constitutional and had great utility for the expansion of the American economy.
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Frequently asked questions
President Andrew Jackson vetoed the re-charter of the Second Bank of the United States, which he believed was corrupt and served only the country's elite.
Jackson believed that Congress did not have the constitutional authority to create the bank. He also believed that the bank was a direct threat to states' rights and individual liberty.
Jackson was successful in shutting down the bank. However, historians give mixed reviews to the results. Some believe that Jackson's actions worsened the Panic of 1837, while others argue that it extended the meaning of American democracy beyond merchants and bankers.
