In Tennessee, Andrew Jackson was hard-pressed to pay his debts in this period. He developed a lifelong hostility to all banks that were not completely backed by gold or silver. This meant, above all, the Second Bank of the United States.
To fight back, Biddle decided to shrink the money supply and cause a recession in 1834 in order to force Jackson to accept a re-charter bill. The Bank demanded that old loans be repaid. It made no new loans.
was an executive order issued by U.S. President Andrew Jackson in 1836 and carried out by President Martin Van Buren . It required payment for government land to be in gold and silver
The Panic of 1837 was a financial crisis in the United States built on a speculative fever .  The bubble burst on May 10, 1837 in New York City , when every bank began to accept payment only in specie ( gold and silver coinage ). This was based on the assumption by former president, Andrew Jackson, that government was selling land for state bank notes of questionable value. The Panic was followed by a five-year depression, with the failure of banks and record-high unemployment levels. Some causes include the economic policies of President Andrew Jackson who created the Specie Circular by executive order and also refused to renew the charter of Second Bank of the United States , resulting in the withdrawal of government funds from that bank. Martin Van Buren , who became president in March 1837, five weeks before the Panic engulfed the young republic's economy, was blamed for the Panic. His refusal to involve the government in the economy was said by some to have contributed to the damages and duration of the Panic. Jacksonian Democrats blamed the banks' irresponsibility, both in funding rampant speculation and in introducing paper money inflation. This was caused by banks' issuing excessive paper money (unbacked by bullion reserves), leading to inflation. Others take a different view, blaming a combination of the Second Bank of the United States, Mexican bimetallism (which drove Mexican silver out of Mexican circulation according to Gresham's Law , and into America where it was legal tender), legal tender law, fractional reserve banking, and state government deficit spending, which dramatically increased the money and credit supply, decreased interest rates, and led to erroneous investment decisions before and up to 1837, according to the Austrian Theory of the Business Cycle
Andrew Jackson: 1767 - 1845
Essential Question: Champion of the “Common Man”? “ King” Andrew? OR
The New “Jackson Coalition” <ul><li>The Planter Elite in the South </li></ul><ul><li>People on the Frontier </li></ul><ul><li>State Politicians – spoils system </li></ul><ul><li>Immigrants in the cities. </li></ul>
Jackson’s Faith in the “Common Man” <ul><li>Intense distrust of Eastern “establishment,” monopolies, & special privilege. </li></ul><ul><li>His heart & soul was with the “plain folk.” </li></ul><ul><li>Belief that the common man was capable of uncommon achievements. </li></ul>
Indian Removal <ul><li>Jackson’s Goal ? </li></ul><ul><li>1830 Indian Removal Act </li></ul><ul><li>Cherokee Nation v. GA (1831) * “domestic dependent nation” </li></ul><ul><li>Worcester v. GA (1832) </li></ul><ul><li>Jackson: John Marshall has made his decision, now let him enforce it! </li></ul>
Jackson’s Use of Federal Power VETO 1830 Maysville Road project in KY [state of his political rival, Henry Clay]
The National Bank Debate Nicholas Biddle President Jackson
Opposition to the 2 nd B.U.S. “ Soft” (paper) $ “ Hard” (specie) $ <ul><li>state bankers felt it restrained their banks from issuing bank notes freely. </li></ul><ul><li>supported rapid economic growth & speculation. </li></ul><ul><li>felt that coin was the only safe currency. </li></ul><ul><li>didn’t like any bank that issued bank notes. </li></ul><ul><li>suspicious of expansion & speculation. </li></ul>
The “Monster” Is Destroyed! <ul><li>1832 Jackson vetoed the extension of the 2 nd National Bank of the United States. </li></ul><ul><li>“ pet banks” ? </li></ul><ul><li>1836 the charter expired. </li></ul><ul><li>1841 the bank went bankrupt! </li></ul>
The Specie Circular (1836) <ul><li>“ wildcat banks.” </li></ul><ul><li>buy future federal land only with gold or silver. </li></ul><ul><li>Jackson’s goal ? </li></ul>
Results of the Specie Circular <ul><li>Banknotes lose their value. </li></ul><ul><li>Land sales plummeted. </li></ul><ul><li>Credit not available. </li></ul><ul><li>Businesses began to fail. </li></ul><ul><li>Unemployment rose. </li></ul>The Panic of 1837!
The 1836 Election Results Martin Van Buren “ Old Kinderhook” [O. K.]