Download Chapter 10 - Section 5

States' Rights and the Economy
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Focus Question: How did old issues take a new
shape in the conflict over a national bank and
tariffs?
*Jackson believed that common people needed
support against powerful forces of wealth and this
led him to take a strong stand against the Bank of
the United States.
The Bank War
*The second Bank of the United States earned
strong support from business people between 1816
and the 1830s because it made loans to business
and was a safe place for the federal gov't to keep
its money. The paper money issued formed a
stable currency and careful policies created
confidence in banks across the country.
*However, many Americans disliked the bank
because they didn't like the way it restricted loans
made by state banks, and often limited the amount
of money the banks loaned. This made farmers
and merchants wanting to borrow money to buy
land angry. Many blamed the economic crisis of
1819 on the banks that caused many to lose their
farms.
*Andrew Jackson was an enemy of the bank
because it allowed a small group of wealthy to
better themselves at the expense of the ordinary
man. The bank president Nicholas Biddle, who
was from a wealthy Philadelphia family, was
especially disliked by Jackson because he often did
favors for powerful politicians.
*Biddle got Congress to renew the bank's charter
in 1832 before it had expired. Jackson vetoed the
charter renewal and this became a major issue in
the presidential election. Most voters supported
Jackson’s veto and he was re-elected.
*Jackson's re-election showed that a determined
President could stir up the people and face down
powerful opponents in Congress. The second
bank ceased to exist after its charter ran out in
1836 after Jackson left office and made it harder
for the next President to end the crisis.
The Question of States' Rights
*Since the founding of our country, the issue of
balance between the powers of the federal and
state governments had been debated.
*On one hand, the Constitutional Convention of
1787 had set up a gov't based on federalism which
is the division of power between the federal and
state levels. The Constitution gave the federal
gov't many powers but at the same time, the 10th
Amendment put a limit on federal power by
allowing any powers not specifically given to the
federal gov't to be reserved to the states.
*Over time this issue had been tested by events
such as the Alien and Sedition Acts and the
Virginia and Kentucky Resolutions, but during
Jackson's presidency these arguments caused a
serious crisis.
The Nullification Crisis
*In 1823 Congress passed a law raising the tariff
on iron, textiles and other products, which caused
the crisis to erupt.
*The tariff helped manufacturers in the North
and some of the West, but caused Southerners to
pay more for their products which seemed unfair
to them.
*Vice-President John Calhoun argued that states
had the right of nullification (an action by a state
that cancels a federal law to which the state
objects). If this happened it would seriously
weaken the federal gov't.
Arguments for Nullification
*Southerners wondered … if the gov't could
enforce what they saw as an unjust law, would
they also have the power to end slavery?
*Calhoun based his idea of nullification on his
view of how the Union was formed. The Union
grew from an agreement between various states
and each state kept certain powers. One of those
powers was the power to nullify federal laws the
people of that state felt were unfair.
Arguments against Nullification
*Daniel Webster gave the clearest argument
against nullification. He argued the United States
had not been formed by the states, but by the
entire American people.
*Both Webster and Jackson defended the Union
over the states for this reason - that the power of
the U.S. came from its people.
*To Calhoun, states’ rights were more important
than saving the Union.
South Carolina Threatens to Secede
*In 1832, Congress passed another tariff law on
iron and textiles.
*SC called a state convention at which they voted
to nullify the tariffs and said these tariffs did not
apply to South Carolina. It went further to say
that if the federal gov't tried to use force to impose
the tariffs, then SC would secede from the Union.
*Jackson responded by putting federal troops in
SC on alert and issuing a statement that "disunion
by armed force is treason".
*With tensions mounting Calhoun resigned as VP.
*In 1833, Jackson asked Congress to allow the
federal gov't to collect the tariff in SC by force if
necessary and support a compromise bill to lower
the tariffs. Congress passed both bills.
*South Carolina was unable to win support for its
position from other states and repealed its tariff
nullification and the crisis was settled peacefully.
*Federal power had won over states' rights for
now, but the issue would continue to be debated
until the Civil War began in 1861.
The End of the Jackson Era
*After two terms Jackson retired from office.
Martin Van Buren was Jackson’s choice to
succeed him. He was Sec. of State during
Jackson’s first term and Vice President during his
second term.
*In the election of 1836, the Whigs ran three
candidates (each from a different region) in order
to prevent any one candidate from receiving the
majority of votes and putting the decision into the
House of Representatives
*The strategy didn't work since Van Buren
received a majority of both electoral and popular
votes.
The Panic of 1837
*Van Buren took office when Britain was
experiencing an economic slowdown so their
manufacturers bought less cotton. This caused
cotton prices to fall sharply which caused banks to
be unable to collect on loans to cotton growers
and this caused hundreds of banks to go
bankrupt.
*The result was an economic collapse called the
Panic of 1837 and the hard times that followed
lasted six years and ruined Van Buren's
presidency.
The Election of 1840
*Van Buren ran for reelection against William
Henry Harrison.
*The Whigs ran a campaign for Harrison using
parades, barbecues and entertainment targeting
ordinary voters and portrayed Harrison as a man
of the people who would feel at home in a log
cabin. This “log cabin” campaign worked and
Harrison was elected ending the Age of Jackson.
Chapter 10- Section 5 Review Questions
*What were the arguments for and against the
second Bank of the United States?
For: It helped business; it kept the federal money
safe; it issued a stable currency; it created
confidence in U.S. banks
Against: It hurt farmers and small merchants; it
restricted state banks; it helped the wealthy; it
caused the economic crisis of 1819
*How does the Tenth Amendment limit federal
powers?
It states that any powers not specifically given to
the federal government are reserved to the state
government.
*What was the position of Vice President John
C.Calhoun on nullification?
Calhoun believed that nullification was a right
that individual states had.
*What was the main cause of the Panic of 1837?
The main cause was an economic crisis in Britain.