Download Chapter Seven, Section Four

Chapter Seven, Section Four
States’ Rights and the National Bank (pgs. 230 – 235)
A Tariff Raises the States’ Rights Issue
 Remember: After the War of 1812, BR wanted to ruin US economy by flooding it
with inexpensive goods
 US Response: Tariffs
The Nullification Theory
 Jackson’s VP = John C. Calhoun (SC)
 Not a fan of the tariffs; referred to the 1828 tariff as a Tariff of Abominations:
o High tariff on manufactured goods forced South to buy more expensive
Northern goods instead of expensive BR goods
 So the South felt the North was getting rich at the expense of the South (…we pay
for all of this…”)
 This was a politically difficult stance for Calhoun.
o He was always a nationalist spokesman (for US)
o Had served under both President Adams and President Jackson & it was a
big deal to go against the national stance
 But, Calhoun’s home state was hurting financially, and planters and their slaves
were moving to more fertile lands in other states.
 Calhoun proved how much he cared about his state with the nullification theory –
questioned the legality of applying federal laws to independent states
 Each state should have the right to reject a federal law it deemed unconstitutional
o Wrote “The South Carolina Exposition” but did not sign his name
o Personally, Calhoun felt if the federal government refused to allow a state
to reject a federal law, they should be able to withdraw, or secede, from
the union.
Hayne & Webster Debate States’ Rights
 January 1830 – one of the great debates in American history took place in the
Senate over the tariff question and the underlying states’ rights issue
 Sen. Robert Hayne (SC) debated Sen. Daniel Webster (Mass.) (see primary source
on p. 232)
 Hayne felt the tariff was wrong because of the way it was negatively affecting the
South
 Webster’s response: We can’t change things up just because it’s inconvenient: no
room for the middle of the road approach
 The public wanted to hear President Jackson’s view
o Jackson: “Our union: it must be preserved.”
o Calhoun’s Rebuttal (in a toast): “The Union, next to our liberty, the most
dear; may we all remember that it only be preserved by respecting the
rights of the States and distributing equally the benefit and burden of the
Union.”
 Their division on this issue was irreparable
o Calhoun resigned as VP
o When Jackson ran for re-election, former Secretary of State Martin Van
Buren was his running mate
South Carolina Rebels
 States’ rights were tested again in 1832
 Congress passed a tariff law that was unacceptable to SC lawmakers
o SC Response: They declared the tariffs void and said if US officials try to
collect the money anyways, SC will secede from the Union.
 Jackson was furious at SC for declaring a federal law void. (Remember Jackson
was a southern slave owner himself)
 Jackson declared South Carolina’s actions as acts of treason and even threatened
to hang Calhoun, and passed the Force Bill of 1833 – allowed federal government
to use army and navy against SC if they refused to pay their proper duties (tariff
$)
 It was getting pretty ugly, until Great Compromiser Henry Clay stepped in
o Proposed a tariff bill that would gradually lower taxes over next 10 years
 For awhile, the issue was controlled, but not resolved (ultimately leads to Civil
War)
Jackson Attacks the National Bank
 Jackson never sent troops to SC, but he did wage war on the Bank of the US
(BUS)
 1832 – Jackson vetoed the bill to recharter the bank (recharter = to draw up a new
contract)
 The initial BUS charter didn’t expire until 1836, but Clay and Webster decided to
bring it up earlier so it could be a campaign issue
o They knew Jackson would probably veto it (thinking he’d lose votes that
way)
o They didn’t realize how much the public despised the BUS
o They underestimated Jackson’s political skill
 Jackson portrayed the BUS as a “privileged institution” for the elite
o BUS had unfair advantages over other banks because all federal tax
revenue was deposited in BUS
o BUS stockholders (not taxpayers) earned the interest off these deposits
o BUS’ president offered loans to congressmen at much lower rates than
average citizens
PET Banks
 Jackson made it clear he despised the BUS
 While president, Jackson appointed Sec. of Treasury to place all government
funds into certain state banks, or PET banks (because they were loyal to
democratic party)
 BUS president Biddle tried to save the BUS by making a desperate move –
demanded a repayment of all loans froze the bank (meaning no new loans given
out)
 Biddle’s hope was that the people would get frustrated and demand a new charter
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When the people came to Jackson, he told them they were crying to the wrong
person (Biddle)
Everything kind of backfired on Biddle and when the BUS charter expired in
1836, it became just another bank – Philadelphia Bank
o Within five years, the Philadelphia Bank went out of business
Whig Party Forms
 Jackson’s actions and decisions upset a lot of people; even within his own
democratic party
 Result: H. Clay, J.Q. Adams, & D. Webster broke away and formed a new
political party – the Whig Party
 Whig Party – based their beliefs on the American System (Clay)
o Believed in a protective tariff
o Wanted federal money used for building roads and canals
o Wanted federal control of banking system
Van Buren Deals with Jackson’s Legacy
 Jackson announced he would not seek a 3rd term (1836 election)
 Democrats went with VP Van Buren as their candidate
 Whig Party couldn’t agree on one candidate, so they ran 3 regional candidates –
so Van Buren won overwhelmingly
Jackson’s Legacy
 The PET banks were irresponsible
 They printed more bank notes than they had gold and silver to back it up
 People started trying to redeem their bank notes for gold and silver
 Then people started using these worthless bank notes to buy land from
government
 Jackson realize this and had Treasury Department issue a statement that public
land could only be bought with actual gold and silver (specie)
 August 1836 – the order went into effect and everyone rushed to banks to cash in
the bank notes
 Banks couldn’t handle the demand (didn’t have that much gold) and stopped
redeeming the bank notes
Panic of 1837 – several banks stopped accepting paper currency and soon collapsed, went
out of business, etc.
 People lost savings, businesses, & 1/3 population was out of work
 Van Buren tried to help by reducing federal spending, but hat only made it worse
Harrison & Tyler
Election of 1840
 Van Buren ran for reelection against the Whig Party candidate: William Henry
Harrison
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This time the Whigs made Harrison seem as the old war hero & common man for
the people (not true – Van Buren was the commoner)
Harrison won and started implementing Whig ideals, but died 1 month later of
pneumonia
John Tyler was Harrison’s VP – Whigs used him for regional votes; didn’t think
he’d be important – actually disagreed on a lot of Whig ideals
o known as “His Accidency”