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Chapter 10
A Changing Nation
States’ Rights and the Economy
Section 5 Essential Question
How did old issues take a new shape in the
conflict over a national bank and tariffs?
Section 5: States’ Rights and the Economy
 The Bank War
 The second Bank of the United States earned the
support of the business people.
 Pros
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Bank made loans to businesses
Safe place for government’s money
Paper currency it issued was stable
Careful policies created confidence in other banks
 Cons
 Limited the money state banks could lend
 Some thought the bank only benefited the wealthy
 Jackson vs. The Monster
 Bank’s worst enemy was Jackson
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He especially disliked the bank’s president – Nicholas
Biddle
He believed Biddle used his position to do favors for
other rich people
Section 5: States’ Rights and the Economy
 The bank fight increased the power of the President
 Biddle got congress to renew the bank’s charter in 1832
 He thought that so many people would support the bank, that Jackson
would be afraid to veto the bill
 He was wrong
 Jackson vetoed the bank
 He won re-election in 1832 by a huge margin
 Defeating Henry Clay (a bank supporter – who helped Biddle get the
charter approved in congress)
 The bank veto showed that a president could get people involved and
not bend to the will of congress
What were the arguments for and against the
second Bank of the United States?
For; It helped business; it kept 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.
Section 5: States’ Rights and the Economy
 The Question of States Rights
The Constitution gives the federal government many significant
powers. The Tenth Amendment says that powers not
specifically given to the federal government are reserved to the
States or the People.
 People had long debated where the balance of power should be
 More to states or more to federal government
 Alien and Sedition Acts
 Virginia and Kentucky Resolutions
 Hartford Conventions

All had raised this question
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.
Section 5: States’ Rights and the Economy
 The Question of States Rights (cont)
 Nullification Crisis
 Began in 1828 with a tariff on Iron, Textiles and
other products
 The tariff helped manufacturers in the North
and West
 But it harmed southerners (they had to pay
more for goods)
 Vice President John C. Calhoun argued that
states had the right of nullification
Section 5: States’ Rights and the Economy
 Arguments for Nullification
 If the government could enforce an ‘unjust’
law, could it also end slavery?
 Calhoun thought the following
 The Union was formed by an agreement
amongst the states
 Each state kept certain powers to itself
 One of these powers was to nullify unjust
laws
Section 5: States’ Rights and the Economy
 Arguments against Nullification
 Daniel Webster summarized it nicely
 We are all agents of the same supreme power, the
people
 Idea was that the U.S. had not been formed by the
states, but by the people within those states
 President vs. Vice President
 Jackson – “Our Federal Union – It must be
preserved”
 Calhoun – “The Union – next to our liberty – the most
dear”
 Calhoun resigned as Vice-President under pressure
What was the position of Vice President John
C. Calhoun on nullification?
He believed that nullification was a right that
individual states had.
Section 5: States’ Rights and the Economy
 South Carolina Threatens to Secede
 Tariff of 1832 passed by Congress
 Lowered some tariffs, but again raised the one on iron and textiles
 SC called a state convention
 They voted to nullify the 1828 & 1832 tariffs
 They said it ‘did not apply to SC’
 The state warned the federal government not to use force to impose
the tariffs or SC would leave the union
 Jackson is Furious…
 He said..
The union cannot be dissolved
 Any attempt to do so was treason
Section 5: States’ Rights and the Economy
 Jackson goes to Congress
 He asks for 2 bills
 1 – to lower the 1828 and 1832 tariffs
 2 – to use force to collect them from SC
 Congress passes both laws
 SC backs down
 They could not get other states to follow their lead
 Didn’t want to stand against the U.S. alone
 The crisis had been settled peacefully…. For now.
Section 5: States’ Rights and the Economy
 The End of the Jackson Era
 Martin Van Buren, Jackson’s Vice President, won the
presidency in 1836.
Soon after he took office the economy was in a severe slump
because Britain was experiencing a economic slowdown,
British manufacturers were buying less cotton which caused
cotton prices to fall sharply.
American banks could not collect on the loans they made, and as
a result, hundreds of banks went bankrupt.
The result was an economic collapse called the Panic of 1837.
What was the main cause of the Panic of
1837?
An economic crisis in Britain.
Section 5 Essential Question
How did old issues take a new shape in the
conflict over a national bank and tariffs?
The issue of national powers versus state
rights resurfaced in the struggle between
Andrew Jackson and the Bank of the
United States and Jackson’s refusal to
allow states to nullify the tariff laws of the
federal government.