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UNIT 8: Changing Nation
UNIT 8: Changing Nation
Lesson: The Bank War
Lesson: The Bank War
Tennessee State Standard:
Tennessee State Standard:
8.46 Examine President Andrew Jackson’s actions regarding the Bank of the U.S. and the Nullification Crisis, and analyze the effects of these events on the nation.
8.46 Examine President Andrew Jackson’s actions regarding the Bank of the U.S. and the Nullification Crisis, and analyze the effects of these events on the nation.
THE "BANK WAR"
THE "BANK WAR"
THE FIRST NATIONAL BANK
THE FIRST NATIONAL BANK
The First National Bank was established by Alexander Hamilton, the first Secretary of the Treasury in 1791, and it had a 20 year charter. The charter for the First Bank of the United States expired in 1811.
THE SECOND NATIONAL BANK
THE SECOND NATIONAL BANK
The nation's financial troubles during the War of 1812 lead to the creation of the Second National Bank in 1816. The Second National Bank also had a twenty year charter. In 1832, Congress passed a bill to renew the Second Bank's charter before it was set to expire in 1836. To the dismay of Congress, President Jackson vetoed the bill, even though the McCulloch v. Maryland case in 1819 ruled that the federal government could create a National Bank. This meant that the Second National Bank would close in 1836.
NEW STATE BANKS
NEW STATE BANKS
Jackson’s veto led to the closure of the Second Bank of the United States when the charter expired in 1836. The Second Bank's closure led to the creation of several state banks. This series of events became known as The Bank War. Many of his supporters had pressured Jackson's veto because they thought that states should have more power than the federal government.
President Jackson's "Bank War" took power away from the federal government and gave it back to the state governments.
MARTIN VAN BUREN BECOMES PRESIDENT
MARTIN VAN BUREN BECOMES PRESIDENT
Andrew Jackson decided not to run for a third term in 1836. The Democrats chose Martin Van Buren, Jackson's Vice President to succeed him. Jackson's popularity helped Van Buren easily win, but he had barely taken office when a financial panic hit the nation.
The creation of state banks led to some economic success as banks loaned money to business people in their states. The state banks, however, kept printing more and more money and lending it to more and more people. They printed too much money, which caused Inflation. When the price of goods rises too much too fast it causes the value of the dollar to have less value. Inflation soon took its toll and the US dollar lost value.
Many of the state banks eventually lost too much money and had to close. This led to the Panic of 1837 the next year.
THE PANIC OF 1837
THE PANIC OF 1837
The Panic of 1837 led to a recession, a severe economic downturn. As banks closed, land values dropped, and thousands of businesses closed. Businesses went bankrupt, people lost their jobs and life savings. The nation was in economic turmoil.
President Martin Van Buren did little to stop the crisis at first because he believed in Laissez-Faire Economics, which means that the government should interfere as little as possible in the nations economy.
By 1840, Van Buren knew he had to do something. He eventually persuaded Congress to create the Federal Treasury in 1840. This meant that the government no longer had to deposit its money in private banks, as it had been doing. Instead the government would be able to keep its money in the Federal Treasury instead. This helped to end the Panic of 1837 and also helped to prevent future bank crises.
Martin Van Buren8th President of the United StatesElected in 1836
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