jackson, the bank war, and the clash of economic worldviews

#3

(second) bank of the united states

(established in 1816) a private, profit making corporation that acted as the govt.’s financial agent, issuing paper money, collecting taxes, and paying the govt.’s debts. also supposed to make sure paper money issued by local banks had real value by preventing the over issuance of money.

specie

gold or sliver; precious metals as money (inconvenient)

spoils system/rotation in office

principle introduced by jackson into the national govt. during his 1st term. means the filling of govt. jobs w persons loyal to the party of the president.

soft money

paper currency issued by banks — some state bankers wanted to issue more soft money and believed jackson’s veto of the bill that would have extended the second bank’s charter would allow them to do so.

hard money

gold and silver — the favored form of money to those who opposed all banks. advocates of hard money also applauded jackson’s veto.

jackson’s reasons for vetoing the bill

* the bank is too powerful → a monopoly
* “exclusive privilege” → it favors the few over the many (unequal)
* unconstitutional

jackson’s values

* civic duty
* the public good (not the 1%) → support the good of the many
* govt. shouldn’t be involved in the economy because the govt. **is** the rich and therefore wants to benefit the rich
* govt. should treat everyone equally
* free competition

pet banks

local banks that received deposits while the charter of the (second) bank of the united states was about to expire in 1836 because jackson despised the bank and had grown impatient while waiting for its charter to expire. the choice of these banks was influenced by political and personal connections. these pet banks failed to regulate the economy and contributed to a massive economic panic.

specie circular

issued by the jackson administration in july 1836. it declared that henceforth the administration would only accept gold and silver as payment for public land.

panic of 1837

beginning of a major economic depression lasting about 6 years; touched pff by a british financial crisis and made worse by falling cotton prices, credit and currency problems, and speculation in land, canals, and railroads.