3.2+Power+to+the+People

War of 1812

France hated Britain, and as part of his overall strategy to bring Britain to its knees, Napoleon closed European ports to British goods and ordered the seizure of any vessel that carried British goods or stopped in a British port. Britain retaliated in 1807 by issuing Orders in Council, which required all ships to land at a British port to obtain a license and pay a tariff. United States shipping was caught in the crossfire. France seized 500 ships and Britain nearly 1,000. The most outrageous violation of America's rights was the British practice of impressment. The British navy desperately needed sailors. Unable to get enough volunteers, the British navy seized impressed men on streets and in taverns. When these efforts failed to muster sufficient men, the British began to stop foreign ships and remove seamen alleged to be British subjects. By 1811, nearly 10,000 American sailors had been forced into the British navy. Some were actually deserters from British ships who made more money sailing on U.S. ships.

Outrage over impressment reached a fever pitch in 1807 when the British man-of-war Leopard fired at the American naval frigate Chesapeake, killing three American sailors. British authorities then boarded the American ship and removed 4 sailors, only 1 of whom was really a British subject. In a desperate attempt to avert war, the United States imposed an embargo on foreign trade. Jefferson regarded the embargo as an idealistic experiment--a moral alternative to war. He believed that economic coercion would convince Britain and France to respect America’s neutral rights.

The embargo was an unpopular and costly failure. It hurt the American economy far more than the British or French, and resulted in widespread smuggling. Exports fell from $108 million in 1807 to just $22 million in 1808. Farm prices fell sharply. Shippers also suffered. Harbors filled with idle ships and nearly 30,000 sailors found themselves jobless. Jefferson believed that Americans would cooperate with the embargo out of a sense of patriotism. Instead, smuggling flourished, particularly through Canada. To enforce the embargo, Jefferson took steps that infringed on his most cherished principles: individual liberties and opposition to a strong central government. He mobilized the army and navy to enforce the blockade, and declared the Lake Champlain region of New York, along the Canadian border, in a state of insurrection. Pressure to abandon the embargo mounted, and early in 1809, just 3 days before Jefferson left office, Congress repealed the embargo. In effect for 15 months, the embargo exacted no political concessions from either France or Britain. But it had produced economic hardship, evasion of the law, and political dissension at home. Upset by the failure of his policies, the 65-year-old Jefferson looked forward to his retirement: "Never did a prisoner, released from his chains, feel such relief as I shall on shaking off the shackles of power.'' The problem of defending American rights on the high seas now fell to Jefferson's hand-picked successor, James Madison. In 1809, Congress replaced the failed embargo with the Non-Intercourse Act, which reopened trade with all nations except Britain and France. Then in 1810, Congress replaced the Non-Intercourse Act with a new measure, Macon's Bill No. 2. This policy reopened trade with France and Britain. It stated, however, that if either Britain or France agreed to respect America's neutral rights, the United States would immediately stop trade with the other nation. Napoleon seized on this new policy in an effort to entangle the United States in his war with Britain. He announced a repeal of all French restrictions on American trade. Even though France continued to seize American ships and cargoes, President Madison snapped at the bait. In early 1811, he cut off trade with Britain and recalled the American minister.

For 19 months, the British went without American trade. Food shortages, mounting unemployment, and increasing inventories of unsold manufactured goods finally convinced Britain to end their restrictions on American trade. But the decision came too late. On June 1, 1812, President Madison asked Congress for a declaration of war. A divided House and Senate concurred. The House voted to declare war on Britain by a vote of 79 to 49; the Senate by a vote of 19 to 13.

Why did the United States declare war on Britain in 1812?

The most loudly voiced grievance was British interference with American rights on the high seas. "Free Trade and Sailors' Rights" was a popular battle cry.

But if British harassment of American shipping was the primary motivation for war, why then did the pro-war majority in Congress come largely from the South, the West, and the frontier, and not from northeastern ship owners and sailors? Northeastern Federalists regarded war with Britain as a grave mistake. The United States, they feared, could not hope to successfully challenge British supremacy on the seas and the government could not finance a war without bankrupting the country. Southerners and westerners, in contrast, were eager to avenge British insults against American honor. Many westerners and southerners had their eye on expansion, viewing war as an opportunity to add Canada and Spanish-held Florida to the United States. War with Britain also offered another incentive: the possibility of clearing western lands of Indians by removing the Indians' strongest ally--the British. In late 1811, General William Henry Harrison provoked a fight with an Indian alliance at Tippecanoe Creek in Indiana. Since British guns were found on the battlefield, many Americans concluded that Britain was responsible for the incident.

Weary of Jefferson and Madison's policy of economic coercion, voters swept 63 out of 142 representatives out of Congress in 1810 and replaced them with young Republicans that Federalists dubbed "War Hawks." Having grown up on tales of heroism during the American Revolution, second-generation Republicans were eager to prove their manhood in a "second war of independence."

The United States was woefully unprepared for war. The army consisted of fewer than 7,000 soldiers, few trained officers, and a navy with just 6 warships. In contrast, Britain had nearly 400 warships.

The American strategy called for a three-pronged invasion of Canada and heavy harassment of British shipping. The attack on Canada, however, was a disastrous failure. At Detroit, 2,000 American troops surrendered to a much smaller British and Indian force. An attack across the Niagara River, near Buffalo, resulted in 900 American prisoners of war. Along Lake Champlain, a third army retreated into American territory after failing to cut undefended British supply lines. In 1813 America suffered new failures, including the defeat and capture of the American army in the swamps west of Lake Erie. Only a series of unexpected victories at the end of the year raised American spirits. On September 10, 1813, America won a major naval victory at the Battle of Lake Erie near Put-in-Bay at the western end of Lake Erie. There, Master-Commandant Oliver Hazard Perry, who had built a fleet at Presque Isle (Erie, Pennsylvania) successfully engaged six British ships. Though Perry's flagship, the Lawrence, was disabled in the fighting, he went on to capture the British fleet. He reported his victory with the stirring words, "We have met the enemy and they are ours.'' The Battle of Lake Erie was America's first major victory of the war. It forced the British to abandon Detroit and retreat toward Niagara. On October 5, 1813, Major General William Henry Harrison overtook the retreating British army and their Indian allies at the Thames River. He won a decisive victory in which the Indian leader Tecumseh was killed, thereby ending the fighting strength of the northwestern Indians. In the spring of 1814, Britain defeated Napoleon in Europe, freeing 18,000 veteran British troops to participate in an invasion of the United States. The British planned to invade the United States at three points: upstate New York across the Niagara River and Lake Champlain, the Chesapeake Bay, and New Orleans. The London Times expressed the confident English mood: Oh, may no false liberality, no mistaken lenity, no weak and cowardly policy interpose to save the United States from the blow! Strike! Chastise the savages, for such they are.... Our demands may be couched in a single word--Submission!' At Niagara, however, American forces, outnumbered more than three to one, halted Britain's invasion from the north. Britain then landed 4,000 soldiers on the Chesapeake Bay coast and marched on Washington, D.C., where untrained soldiers lacking uniforms and standard equipment were protecting the capital. The result was chaos. President Madison narrowly escaped capture by British forces. On August 24, 1814, the British humiliated the nation by capturing and burning Washington, D.C. President Madison and his wife Dolley were forced to flee the capital--carrying with them many of the nation's treasures, including the Declaration of Independence and Gilbert Stuart's portrait of George Washington. The British arrived so soon after the president fled that the officers dined on a White House meal that had been prepared for the Madisons and 40 invited guests. <span style="font-family: Tahoma,Geneva,sans-serif;">Britain's next objective was Baltimore. To reach the city, British warships had to pass the guns of Fort McHenry, manned by 1,000 American soldiers. Waving atop the fort was the largest garrison flag ever designed--30 feet by 42 feet. On September 13, 1814, British warships began a 25-hour bombardment of Fort McHenry. British vessels anchored two miles off shore--close enough so that their guns could hit the fort, but too far for American shells to reach them. All through the night British cannons bombarded Fort McHenry, firing between 1,500 and 1,800 cannon balls at the fort. In the light of the "rockets' red glare, the bombs bursting in air,'' Francis Scott Key, a young lawyer detained on a British ship, saw the American flag waving over the fort. At dawn on September 14, he saw the flag still waving. The Americans had repulsed the British attack, with only 4 soldiers killed and 24 wounded. <span style="font-family: Tahoma,Geneva,sans-serif;">Key was so moved by the American victory that he wrote a poem entitled "The Star-Spangled Banner" on the back of an old envelope. The song was destined to become the young nation's national anthem. <span style="font-family: Tahoma,Geneva,sans-serif;">The country still faced grave threats in the South. On January 8, 1815, the British fleet and a battle-tested 10,000-man army finally attacked New Orleans. To defend the city, Jackson assembled a ragtag army, including French pirates, Choctaw Indians, western militia, and freed slaves. Although British forces outnumbered Americans by more than 2 to 1, American artillery and sharpshooters stopped the invasion. American losses totaled only 8 dead and 13 wounded, while British casualties were 2,036.

Ironically, American and British negotiators in Ghent, Belgium, had signed the peace treaty ending the War of 1812 two weeks earlier. Britain, convinced that the American war was so difficult and costly that nothing would be gained from further fighting, agreed to return to the conditions that existed before the war. Left unmentioned in the peace treaty were the issues over which Americans had fought the war--impressment and British interference with American trade. Although often treated as a minor footnote to the bloody European war between France and Britain, the War of 1812 was crucial for the United States. First, it effectively destroyed the Indians' ability to resist American expansion east of the Mississippi River. General Andrew Jackson crushed the Creek Indians at the Battle of Horseshoe Bend in Alabama, while General William Henry Harrison defeated Indians in the Old Northwest at the Battle of the Thames. Abandoned by their British allies, the Indians reluctantly ceded most of their lands north of the Ohio River and in southern and western Alabama to the U.S. government.

<span style="font-family: Tahoma,Geneva,sans-serif;">Second, the war allowed the United States to rewrite its boundaries with Spain and solidify control over the lower Mississippi River and the Gulf of Mexico. Although the United States did not defeat the British Empire, it had fought the world's strongest power to a draw. Spain recognized the significance of this fact, and in 1819 Spanish leaders abandoned Florida and agreed to an American boundary running clear to the Pacific Ocean. <span style="font-family: Tahoma,Geneva,sans-serif;">Third, the Federalist Party never recovered from its opposition to the war. Many Federalists believed that the War of 1812 was fought to help Napoleon in his struggle against Britain, and they opposed the war by refusing to pay taxes, boycotting war loans, and refusing to furnish troops. In December 1814, delegates from New England gathered in Hartford, Connecticut, where they recommended a series of constitutional amendments to restrict the power of Congress to wage war, regulate commerce, and admit new states. The delegates also supported a one-term president (in order to break the grip of Virginians on the presidency) and abolition of the Three-fifths clause in the Constitution (which increased the political clout of the South), and talked of seceding if they did not get their way.

The proposals of the Hartford Convention became public knowledge at the same time as the terms of the Treaty of Ghent and the American victory in the Battle of New Orleans. Euphoria over the war's end led many people to brand the Federalists as traitors. The party never recovered from this stigma and disappeared from national politics.

<span style="color: #0000ff; font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: x-large;">Andrew Jackson <span style="color: #0000ff; font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: large;">The Election The Election of 1828 was one of the most bitter campaigns in American history. Jackson’s followers repeated the charge that Adams was an “aristocrat” who had obtained office as a result of a “corrupt bargain.” The Jackson forces also alleged that the president had used public funds to buy personal luxuries and had installed gaming tables in the White House. They even charged that Mrs. Adams had been born out of wedlock. Adams’s supporters countered by digging up an old story that Jackson had begun living with his wife before she was legally divorced from her first husband (which was technically true, although neither Jackson nor his wife Rachel knew her first husband was still living). They called the general a slave trader, a gambler, and a backwoods buffoon who could not spell more than one word out of four correctly. One Philadelphia editor published a handbill picturing the coffins of 12 men allegedly murdered by Jackson in numerous duels. The Jackson campaign in 1828 was the first to appeal directly for voter support through a professional political organization. Skilled political organizers, like Martin Van Buren of New York, Amos Kendall of Kentucky, and Thomas Ritchie of Virginia, created an extensive network of campaign committees and subcommittees to organize mass rallies, parades, and barbecues, and to erect hickory poles, Jackson’s symbol. For the first time in American history, a presidential election was the focus of public attention, and voter participation increased dramatically. Twice as many voters cast ballots in the election of 1828 as in 1824, four times as many as in 1820. As in most previous elections, the vote divided along sectional lines. Jackson swept every state in the South and West and Adams won the electoral votes of every state in the North except Pennsylvania and part of New York. Contemporaries interpreted Jackson’s resounding victory as a triumph for political democracy. Jackson’s supporters called the vote a victory for the “farmers and mechanics of the country” over the “rich and well born.” Even Jackson’s opponents agreed that the election marked a watershed in the nation’s political history, signaling the beginning of a new democratic age. One Adams supporter said bluntly, “a great revolution has taken place.” Who Was Andrew Jackson? In certain respects, Jackson was truly a self-made man. Born in 1767 in a frontier region along the North and South Carolina border, he was the first president to be born in a log cabin. His father, a poor farmer from Northern Ireland, died two weeks before his birth, while his mother and two brothers died during the American Revolution. At the age of 13, Jackson volunteered to fight in the American Revolution. He was taken prisoner and a British officer severely slashed Jackson’s hand and head when the boy refused to shine the officer’s shoes. Jackson soon rose from poverty to a career in law and politics, becoming Tennessee’s first congressman, a senator, and judge on the state supreme court. Although he would later gain a reputation as the champion of the common people, in Tennessee he was allied by marriage, business, and political ties to the state’s elite. As a land speculator, cotton planter, and attorney, he accumulated a large personal fortune and acquired more than 100 slaves. His candidacy for the presidency was initially promoted by speculators, creditors, and elite leaders in Tennessee who hoped to exploit Jackson’s popularity in order to combat anti-banking sentiment and fend off challenges to their dominance of state politics. Expanding the Powers of the Presidency In office, Jackson greatly enhanced the power and prestige of the presidency. While each member of Congress represented a specific regional constituency, only the president, Jackson declared, represented all the people of the United States. Jackson convinced many Americans that their votes mattered. He espoused a political ideology of “democratic republicanism” that stressed the common peoples’ virtue, intelligence, and capacity for self-government. He also expressed a deep disdain for the “better classes,” which claimed a “more enlightened wisdom” than common men and women. Endorsing the view that a fundamental conflict existed between working people and the “nonproducing” classes of society, Jackson and his supporters promised to remove any impediments to the ordinary citizen’s opportunities for economic improvement. According to the Jacksonians, inequalities of wealth and power were the direct result of monopoly, favoritism, and special privileges, which made “the rich richer and the powerful more potent.” Only free competition in an open marketplace would ensure that wealth would be distributed in accordance with each person’s “industry, economy, enterprise, and prudence.” The goal of the Jacksonians was to remove all obstacles that prevented farmers, artisans, and small shopkeepers from earning a greater share of the nation’s wealth. Nowhere was the Jacksonian ideal of openness made more concrete than in Jackson’s theory of rotation in office, known as the spoils system. In his first annual message to Congress, Jackson defended the principle that public offices should be rotated among party supporters in order to help the nation achieve its republican ideals. Performance in public office, Jackson maintained, required no special intelligence or training, and rotation in office would ensure that the federal government did not develop a class of corrupt civil servants set apart from the people. His supporters advocated the spoils system on practical political grounds, viewing it as a way to reward party loyalists and build a stronger party organization. As Jacksonian Senator William Marcy of New York proclaimed, “To the victor belongs the spoils.”

The spoils system opened government positions to many of Jackson’s supporters, but the practice was neither as new nor as democratic as it appeared. During his first 18 months in office, Jackson replaced fewer than 1,000 of the nation’s 10,000 civil servants on political grounds, and fewer than 20 percent of federal officeholders were removed during his administration. Moreover, many of the men Jackson appointed to office had backgrounds of wealth and social eminence. Jackson did not originate the spoils system. By the time he took office, a number of states, including New York and Pennsylvania, practiced political patronage.

Nullification

Bitter sectional disputes arose during Jackson’s presidency over public lands and the tariff. In 1820, to promote the establishment of farms, Congress encouraged the rapid sale of public land by reducing the minimum land purchase from 160 to just 80 acres at a price of $1.25 per acre.

Some groups favored even easier terms for land sales. Squatters, for example, who violated federal laws that forbade settlement prior to the completion of public surveys, pressured Congress to adopt preemption acts that would permit them to buy the land they occupied at the minimum price of $1.25 when it came up for sale. Urban workingmen--agitating under the slogan “Vote Yourself a Farm”--demanded free homesteads for any American who would settle the public domain. Transportation companies, which built roads, canals, and later railroads, called for grants of public land to help fund their projects. In Congress, two proposals--“distribution” and “graduation”--competed for support. Under the distribution proposal, which was identified with Henry Clay, Congress would distribute the proceeds from the sale of public lands to the states, which would use it to finance transportation improvements. Senator Thomas Hart Benton of Missouri offered an alternative proposal, graduation. He proposed that Congress gradually reduce the price of unsold government land and finally freely give away unpurchased land. At the end of 1829, a Connecticut senator proposed a cessation of public land sales. This transformed the debate over public lands into a sectional battle over the nature of the union. Senator Benton denounced the proposal as a brazen attempt by manufacturers to keep laborers from settling the West, fearing that westward migration would reduce the size of the urban workforce and therefore raise their wage costs. Benton’s speech prompted Robert Y. Hayne, a supporter of John C. Calhoun, to propose an alliance of southern and western interests based on a low tariff and cheap land. Affirming the principle of nullification, he called on the two sections to unite against attempts by the Northeast to strengthen the powers of the federal government. Daniel Webster of Massachusetts answered Hayne in one of the most famous speeches in American history. The United States, Webster proclaimed, was not simply a compact of the states. It was a creation of the people, who had invested the Constitution and the national government with ultimate sovereignty. If a state disagreed with an action of the federal government, it had a right to sue in federal court or seek to amend the Constitution, but it had no right to nullify a federal law. That would inevitably lead to anarchy and civil war. It was delusion and folly to think that Americans could have “Liberty first and Union afterwards,” Webster declared. “Liberty and Union, now and forever, one and inseparable.” Jackson revealed his position on the questions of states’ rights and nullification at a Jefferson Day dinner on April 13, 1830. Fixing his eyes on Vice President John C. Calhoun, Jackson expressed his sentiments with the toast: “Our Union: It must be preserved.” Calhoun responded to Jackson’s challenge and offered the next toast: “The Union, next to our liberty, most dear. May we always remember that it can only be preserved by distributing equally the benefits and burdens of the Union.” Relations between Jackson and Calhoun had grown increasingly strained. Jackson had learned that when Calhoun was secretary of war under Monroe he had called for Jackson’s court-martial for his conduct during the military occupation of Florida in 1818. Jackson was also angry because Mrs. Calhoun had snubbed the wife of Secretary of War John H. Eaton, because Mrs. Eaton was the twice-married daughter of a tavernkeeper. Because Jackson’s own late wife Rachel had been snubbed by society (partly because she smoked a pipe, partly because she had unknowingly married Jackson before a divorce from her first husband was final), the president had empathy for young Peggy Eaton. In 1831, Jackson reorganized his cabinet and forced Calhoun’s supporters out. The next year, Calhoun became the first vice president to resign his office, when he became a senator from South Carolina. In 1832, in an effort to conciliate the South, Jackson proposed a lower tariff. Revenue from the existing tariff (together with the sale of public lands) was so high that the federal debt was quickly being paid off; in fact on January 1, 1835, the United States Treasury had a balance of $440,000, not a penny of which was owed to anyone--the only time in U.S. history when the government was completely free of debt. The new tariff adopted in 1832 was somewhat lower than the Tariff of 1828 but still maintained the principle of protection. In protest, South Carolina’s fiery “states’ righters” declared both the Tariff of 1832 and the Tariff of 1828 null and void. To defend nullification, the state legislature voted to raise an army. Jackson responded by declaring nullification illegal and then asked Congress to empower him to use force to execute federal law. Congress promptly enacted a Force Act. Privately, Jackson threatened to “hang every leader...of that infatuated people, sir, by martial law, irrespective of his name, or political or social position.” He also dispatched a fleet of eight ships and a shipment of 5,000 muskets to Fort Pinckney, a federal installation in Charleston harbor. In Congress, Henry Clay, the “great compromiser” who had engineered the Missouri Compromise of 1820, worked feverishly to reduce South Carolina’s sense of grievance. “He who loves the Union must desire to see this agitating question brought to a termination,” he said. In less than a month, he persuaded Congress to enact a compromise tariff with lower levels of protection. South Carolinians backed down, rescinding the ordinance nullifying the federal tariff. As a final gesture of defiance, however, the state adopted an ordinance nullifying the Force Act. In 1830 and 1831 South Carolina stood alone. No other southern state yet shared South Carolina’s fear of federal power or its militant desire to assert the doctrine of states’ rights. South Carolina’s anxiety had many causes. By 1831 declining cotton prices and growing concern about the future of slavery had turned the state from a staunch supporter of economic nationalism into the nation’s most aggressive advocate of states’ rights. Increasingly, economic grievances fused with concerns over slavery. In 1832, the Palmetto State was one of just two states (the other was Mississippi) the majority of whose population was made up of slaves. By that year events throughout the hemisphere made South Carolinians desperately uneasy about the future of slavery. In 1831 and 1832 militant abolitionism had erupted in the North, slave insurrections had occurred in Southampton County, Virginia, and Jamaica, and Britain was moving to emancipate all slaves in the British Caribbean.

By using the federal tariff as the focus of their grievances, South Carolinians found an ideal way of debating the question of state sovereignty without debating the morality of slavery. Following the Missouri Compromise debates, a slave insurrection led by Denmark Vesey had been uncovered in Charleston in 1822. By 1832 South Carolinians did not want to stage debates in Congress that might bring the explosive slavery issue to the fore and possibly incite another slave revolt.

The Bank Fight The major political issue of Jackson?s presidency was his war against the Second Bank of the United States.

The banking system at the time Jackson assumed the presidency was completely different than it is today. At that time, the federal government coined only a limited supply of hard money and printed no paper money at all. The principal source of circulating currency?paper bank notes?was private commercial banks (of which there were 329 in 1829), chartered by the various states. These private, state-chartered banks supplied the credit necessary to finance land purchases, business operations, and economic growth. The notes they issued were promises to pay in gold or silver, but they were backed by a limited amount of precious metal and they fluctuated greatly in value. In 1816, the federal government had chartered the Second Bank of the United States partly in an effort to control the notes issued by state banks. By demanding payment in gold or silver, the national bank could discipline over-speculative private banks. But the very idea of a national bank was unpopular for various reasons. Many people blamed it for causing the Panic of 1819. Others resented its political influence. For example, Senator Daniel Webster was both the bank?s chief lobbyist and a director of the bank?s Boston branch. Wage earners and small-business owners blamed it for economic fluctuations and loan restrictions. Private banks resented its privileged position in the banking industry. In 1832, Henry Clay, Daniel Webster, and other Jackson opponents in Congress, seeking an issue for that year?s presidential election, passed a bill rechartering the Second Bank of the United States. The bank?s charter was not due to expire until 1836, but Clay and Webster wanted to force Jackson to take a clear pro-bank or anti-bank position. Jackson had frequently attacked the bank as an agency through which speculators, monopolists, and other seekers after economic privilege cheated honest farmers and mechanics. Now, his adversaries wanted to force him either to sign the bill for recharter, alienating voters hostile to the bank, or veto it, antagonizing conservative voters who favored a sound banking system. Jackson vetoed the bill in a forceful message that condemned the bank as a privileged ?monopoly? created to make ?rich men...richer by act of Congress.? The bank, he declared, was ?unauthorized by the Constitution, subversive of the rights of the States, and dangerous to the liberties of the people.? In the presidential campaign of 1832, Henry Clay tried to make an issue of Jackson?s bank veto, but Jackson swept to an easy second-term victory, defeating Clay by 219 electoral votes to 49. Jackson interpreted his reelection as a mandate to undermine the bank still further. In September 1833, he ordered his Treasury secretary to divert federal revenues from the Bank of the United States to selected state banks, which came to be known as ?pet? banks. The secretary of the Treasury and his assistant resigned rather than carry out the president?s order. It was only after Jackson appointed a second new secretary that his order was implemented. Jackson?s decision to divert federal deposits from the national bank prompted his adversaries in the Senate to formally censure the president?s actions as arbitrary and unconstitutional. The bank?s president, Nicholas Biddle, responded to Jackson?s actions by reducing loans and calling in debts. ?This worthy President,? said Biddle, ?thinks that because he has scalped Indians and imprisoned Judges he is to have his way with the Bank. He is mistaken.? Jackson retorted: ?The Bank...is trying to kill me, but I will kill it.? Jackson?s decision to divert funds drew strong support from many conservative businesspeople who believed that the bank?s destruction would increase the availability of credit and open up new business opportunities. Jackson, however, hated all banks, and believed that the only sound currencies were gold and silver. Having crippled the Bank of the United States, he promptly launched a crusade to replace all bank notes with hard money. Denouncing ?the power which the moneyed interest derives from a paper currency,? the president prohibited banks that received federal deposits from issuing bills valued at less than $5. Then, in the Specie Circular of 1836, Jackson prohibited payment for public lands in anything but gold or silver. That same year, in another anti-banking measure, Congress voted to deprive pet banks of federal deposits. Instead, nearly $35 million in surplus funds was distributed to the states to help finance internal improvements. To Jackson?s supporters, the presidential veto of the bank bill was a principled assault on a bastion of wealth and special privilege. His efforts to curtail the circulation of bank notes was an effort to rid the country of a tool used by commercial interests to exploit farmers and working men and women. To his critics, the veto was an act of economic ignorance that destroyed a valuable institution that promoted monetary stability, eased the long-distance transfer of funds, provided a reserve of capital on which other banks drew, and helped regulate the bank notes issued by private banks. Jackson?s effort to limit the circulation of bank notes was a misguided act of a ?backward-looking? president, who failed to understand the role of a banking system in a modern economy. The effect of Jackson?s banking policies remains a subject of debate. Initially, land sales, canal construction, cotton production, and manufacturing boomed following Jackson?s decision to divert federal funds from the bank. At the same time, however, state debts rose sharply and inflation increased dramatically. Prices climbed 28 percent in just three years. Then in 1837, just after the election of Jackson?s successor Democrat Martin Van Buren, a deep financial depression struck the nation. Cotton prices fell by half. In New York City, 50,000 people were thrown out of work and 200,000 lacked adequate means of support. Hungry mobs broke into the city?s flour warehouse. From across the country came ?rumor after rumor of riot, insurrection, and tumult.? Not until the mid-1840s would the country fully pull out of the depression. Who was to blame for the Panic of 1837? One school of thought holds Jackson responsible, arguing that his banking policies removed a vital check on the activities of state-chartered banks. Freed from the regulation of the second Bank of the United States, private banks rapidly expanded the volume of bank notes in circulation, contributing to the rapid increase in inflation. Jackson?s Specie Circular of 1836, which sought to curb inflation by requiring that public land payments be made in hard currency, forced many Americans to exchange paper bills for gold and silver. Many private banks lacked sufficient reserves of hard currency and were forced to close their doors, triggering a financial crisis. Another school of thought blames the panic on factors outside of Jackson?s control. A surplus of cotton on the world market caused the price of cotton to drop sharply, throwing many southern and western cotton farmers into bankruptcy. Meanwhile, in 1836, Britain suddenly raised interest rates, which drastically reduced investment in the American economy and forced a number of states to default on loans from foreign investors. If Jackson?s policies did not necessarily cause the panic, they certainly made recovery more difficult. Jackson?s hand-picked successor, Martin Van Buren, responded to the economic depression in an extremely doctrinaire way. A firm believer in the Jeffersonian principle of limited government, Van Buren refused to provide government aid to business.

Fearful that the federal government might lose funds it had deposited in private banks, Van Buren convinced Congress in 1840 to adopt an independent treasury system. Under this proposal, federal funds were locked up in insulated subtreasuries, which were totally divorced from the banking system. As a result the banking system was deprived of funds that might have aided recovery.

1. Why did jefferson believe Americans would go along with the embargo?

2. Why did the "Warhawks" feel like they had something to prove?

3. What was Jackson's background?

4. What state instigated the nullification crisis?

5. Who was Jackson's main opponent in the Bank Fight?



Everybody is a star Who can rain, chase the dust away Everybody wants to shine Oh, come out on a cloudy day
 * Everybody Is A Star lyrics**

'Til the sun that loves you proud When the system tries to bring you down Every hand to shine tonight You don't need darkness to do what you think is right

Ba pa pa Pa pa pa Pa pa pa

Everybody is a star I can feel it when you shine on me I love you for who you are Not the one you feel you need to be

Ever catch a falling star Ain't no stopping 'til it's in the ground Everybody is a star One big circle going round and round

Ba pa pa Pa pa pa Pa pa pa

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