Andrew Jackson - Removal of deposits



Even as the tour proceeded, Jackson was deeply immersed in politics, for the issue of the Bank of the United States again pressed upon his attention. The bank's charter continued in effect until 1836 and then permitted the institution two years more to wind up its affairs, during which time it could try to reverse its fate. Indeed, Jackson thought there was sufficient evidence that Biddle would neither acknowledge defeat nor work harmoniously with the government. He alleged that since the veto, Biddle had circulated propaganda for the bank, aided Clay's presidential campaign, and mismanaged bank funds.

Equally ominous, the recent alliance of Clay and Calhoun gave new life to the opposition, which, Jackson predicted, would seek recharter as the centerpiece of a system of expanded governmental powers. He considered the situation a "crisis," and he determined to remove the government's deposits from the bank, relying instead on a system of selected state banks, called pet banks. In preparation, he shuffled his cabinet personnel, shifting the conservative McLane from the Treasury Department to the State Department and appointing the Pennsylvanian William Duane to replace McLane.

Throughout the summer of 1833, Jackson confronted evidence of serious resistance to removal from probank Democrats, cabinet members, and even good friends like Van Buren and Ritchie. At the end of July, he fled the sultry capital for his Virginia vacation resort at the Rip Raps to ponder the situation. As the steamboat conveyed the party down the Chesapeake, an incident occurred that showed Jackson's unflagging self-assurance. The Chesapeake waves were unusually high, seemingly endangering the old vessel and its occupants. An aged passenger exhibited a good deal of alarm, but Jackson retained his composure. "You are uneasy," Jackson said to the gentleman. "You never sailed with me before, I see."

Deciding to put to rest further discussion of his intentions, Jackson returned to Washington, called his cabinet together, and explained that there could now be "no excuse for further delay." Though most cabinet members swung reluctantly to his side, Duane stubbornly resisted issuing the order changing the government's depository. Jackson, who regarded Duane as "either the weakest mortal, or the most strange composition I have ever met with," fired him and replaced him with Roger Taney. On 25 September, Taney ordered that as of 1 October, future government revenue be placed in state banks.

The removal order set off a last, mighty struggle with the Bank of the United States. Biddle retaliated by turning the screws on the economy, reducing loans, calling in debts, and curtailing other activities. "This worthy President thinks that because he has scalped Indians and imprisoned Judges he is to have his way with the Bank. He is mistaken," Biddle fumed.

At the same time, opposition leaders, who were beginning to adopt the name Whig , denounced Jackson. "Executive usurpation," they cried, trying to undermine Jackson's popular appeal. During the so-called Panic Session of Congress, Senate Whigs managed to pass two resolutions in February and March 1834, rejecting Taney's reasons for removing the deposits and censuring Jackson's actions as "not conferred by the Constitution and laws."

As economic distress spread throughout the country, many Jacksonians hesitated. But Jackson refused to bend or to lose control of the situation. "Go to Nicholas Biddle," he told complaining delegations seeking redress. The president also turned the tables on the Senate by issuing a "Protest" detailing its own transgressions and disregard of constitutional procedures.

The tide of events soon turned in Jackson's favor. In February 1834, Pennsylvania's governor, George Wolf, turned against the bank, and in Congress the president's backers counterattacked. Finally, on 4 April 1834, after prolonged debate, House Democrats passed four resolutions that sustained both the bank veto and the removal of the deposits. Having failed to alter Jackson's policy, the bank's directors voted in July to end the contraction.

Jackson had once again prevailed. "Biddled, Diddled, and Undone" was the epitaph for the bank penned by one Democratic editor. To be sure, Jackson lost some supporters over the removal issue, mostly among southern states' rights radicals, who used the question of "executive usurpation" as a pretext for joining the Whig party. But like other Jackson policies, removal clarified party lines and firmed the commitment of those who remained loyal.

Destroying the national bank was one thing, but assuring the nation a stable and secure monetary system was another. Following removal, therefore, Jackson began his campaign to reform banking abuses. His administration's fondness for hard money—gold and silver—is probably the most difficult of all Jackson measures for twentieth-century Americans to understand. In an era when banking was virtually unregulated and an expanding economy fueled demands for more and more credit, paper money was an obvious target for reformers, who held it responsible for a cruel economic cycle of booms and busts. They also complained that it sapped public virtue by encouraging speculation, robbing "honest labor" of its earnings, and making "knaves rich, powerful and dangerous." Attacks against excessive paper issues reflected concern for actual banking abuses as well as anxiety and, for some, resistance to the onrushing Market Revolution.

Administration efforts to encourage what the Globe called "Jackson money" only partially succeeded. Congress revalued gold in 1834, but the precious metal never became a circulating medium for ordinary commercial transactions. Moreover, Congress dragged its feet for two years before imposing restraints on small bills, so that Treasury Secretary Levi Woodbury, who succeeded Taney, was compelled to take action on his own authority. In April 1835, he ordered that after 30 November the pet banks refuse bank notes under $5 for payment of government dues. In early 1836 the ban was extended to cover notes under $10.

During his second administration, Jackson also turned his attention to the issue of a successor who would perpetuate his program and party. Van Buren had long been his choice, and in the summer of 1834, Jackson informed Van Buren that he was insisting that party leaders take a stand against the Bank of the United States, national banks in general, "and in favor of you." Van Buren, however, had drawbacks. As a northerner, he was suspect to many southerners, and his reputation for political scheming left a trail of political resentment. Rebellion against a Van Buren succession flared throughout the South and consolidated behind the candidacy of a slaveholding Tennessean, Senator Hugh Lawson White.

In order to unite the party behind Van Buren, Jackson urged that a national convention meet early. In response to the administration's call, delegates convened in Baltimore on 20 May 1835 and nominated Van Buren, along with the popular Kentucky military hero and senator Richard M. Johnson. Johnson's earlier open relationship with a mulatto woman and his two daughters by her stirred resistance among many southern Jacksonians who preferred Virginia's William C. Rives for the vice presidency. But Jackson's fiat went forth, and Johnson won the necessary two-thirds vote.





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