Effects Of The Panic Of 1837

He thought that it was giving too much power to one person and did not like that idea. So, Jackson took out all of the US government deposits from the national bank of the United States and deposited it into the state banks. That made the National bank shut down because there was no money running the bank because Jackson, the largest customer of the national bank withdrew all the money out. That action step that Jackson took basically caused a financial crisis because there was no money left in the national bank and caused a depression for the US.

Faced with this economic decline, came other factors that included unemployment and lack of confidence in banks (Church 100). Restoring faith in banks across the United States was one goal for FDR. As depositors lost confidence in the national bank, over $1,000,000,000 was taken out in cash and hoarded (Boardman 64). The Emergency Banking Act closed all banks for four straight days, and put them under inspection by the national government (Schraff 52). Banks were put under meticulous scrutiny by the Treasury Department. The U.S. government demanded that all hoarded gold be returned and all of the $1,000,000,000 was deposited (Boardman 65). Banks were allowed to open only under a strict system of licensing (Schraff 52). Another banking program was The Federal Deposit Insurance Corporation, or FDIC, which was created by Congress to guarantee deposits up to $5000 (Gupta). In the case

He believed that the Bank has to be abolished due to several reasons. First of all, the bank concentrated the nation's wealth in a single institution which created an unhealthy for the economy monopoly. Second of all, he believed that the bank favored the wealthy over the common people. The third reason was that the bank had too much control over members of Congress. In other words, the subsidy of the bank to one particular party or the lack of the finance could influence the results of the elections at some point. And the bank also favored northeastern states over southern and western states. Thus, Jackson succeeded in destroying the Bank by vetoing its 1832 re-charter by Congress and by withdrawing U.S. funds in 1833. This action led to federal money being put into state banks who then loaned it out freely leading to inflation. State banks were issuing paper banknotes that were not backed by gold or silver reserves which led to rapid inflation. Moreover, the expansion of credit and speculation took place. As a result, state banks collapsed which was a cause of the Panic of 1837. However, despite the crisis and depression, the liquidation of the Bank was an achievement of Jackson’s presidency and led to trivial of the economy later on.

These periods of financial panics along with the inelastic money supply had long beleaguered the country. Bank failures, business bankruptcies, and unstable economic development were results of the lack of a central banking system (Federal Reserve System 8th ed. pp. 6-7). The Panic of 1907 was a bank run of epic proportions that exacerbated the problem. Depositors withdrew their savings from the second and third largest banks in the country. These banks were not able to generate enough funds to cover the demand and subsequently closed their doors. Their closings rapidly spread fear across the country leading to one of the largest runs on the banks the nation had ever witnessed (Schlesinger pp. 41).

Even his Farewell Address alluded to the bank as “an insidious "money power" that threatened to subvert American liberty” (The Gilder Lehrman Institute of American History). Jackson’s war on the bank had devastating effects on America’s economy that eventually led to the Panic of 1837 and a financial depression that continued until the mid-1840s. Jackson’s war on the bank also included attacks on chartered corporations, which hurt those companies and their workers (Miller Center). Andrew Jackson was also known for being highly against the usage of paper currency, even going as far as to “order the issuance of a ‘Specie Circular’ in 1836 requiring payment in coin for western public lands” (Miller Center). Why would we want to honor Andrew Jackson on a currency he openly

During the Jacksonian period of 1824-1848, America had great economic development that played a role in making this period known as the “common man,” live up to its expectations. The Bank War was one of Andrew Jackson's many attempts to lower the power of the federal government. The Bank of the United States was ran by Nicholas Biddle, and issued federal deposits, credit and bank notes. However, the main issue was that it restrained the power of state banks. The soft-money and hard-money were two groups, that opposed the Bank. The

The Panic of 1819 was the nation’s first major economic depression. The Panic of 1819 followed the events of the War of 1812, a period of national liveliness and included the forming of the Second Bank of America. After the War of 1812, the United States economy thrived as chartered State banks that were loosely formed issued redeemable promissory notes that were far beyond specie. The amount of money multiplied rapidly. Eventually, bank notes started to be sold at a discount as foreigners and money brokers profitably claimed the notes for specie. In addition, the Bank of the United States' began to call on branches to redeem other bank obligations. The monetary expansion ended all of a sudden and a lot of bankruptcies came to pass. The aftermath of the War of 1812 included war debt to be fixed, downturns in exports, and lack of demand for both manufactured goods and agricultural goods. There was a plan that was put in place to help repair America’s current economic state such as establishing the Second Bank of the United States to provide credit to citizens and establishing other banks around the U.S. This plan ended up causing a lot of problems such as poor management of the banks and the policies within the United States’ economy.

Andrew Jackson was the seventh president of the United States. His presidential term was from March 4, 1829 to March 4, 1837. Jackson was not about banks. Jackson hated the idea of the Second Bank charter renewal. One of Jackson’s famous quotes was; “The Bank… is trying to kill me, but I will kill it.” Jackson’s opinion of the Bank of the United States was that it was dangerous to the liberty of the people. Jackson’s opposition to banks became like an obsession. In 1832, Jackson vetoed the bill calling for an early renewal of the Second Bank’s charter even though the renewal was still possible when the charter expired in 1836. In order to prevent that from happening, Jackson set out to reduce the Bank’s economic power. Jackson acted against the advice of many congressional committees and several cabinet members. On October 1, 1833, Jackson announced that federal funds would no longer be deposited in the Bank of the United States. Jackson began placing the

Although Jackson was a hard money supporter, he was sensitive to his many soft money supporters, and made it clear that he would object to renewing the charter of the Bank of the United States, which was due to expire in 1836. When Jackson could not legally abolish the Bank of the United States before the expiration of its charter, he weakened it by removing the government’s deposits from the bank. Jackson fired two of his secretary of treasury when they refused to carry out the order because they believed that such an action would destabilize the financial system. Jackson got Roger Taney to carry out his order. Taney took the deposits out of the Bank of the

Since the national bank was now destroyed, Jackson did not have a place to put it, so he decided to divide the money among the states. This is where it went downhill since the states begin printing massive amounts of money and quickly got out of hand and resulted in one of the longest depression in U.S history. As a result, The United States begin borrowing money again and the debt soon begin.

Nicholas Biddle proved great opposition to President Jackson. He wanted to re-charter the National Bank; however, many people were against Biddle’s decision. This was particularly true of people in the west. They were still wary of a national bank, after the Panic of 1819, which involved mishaps in land speculation. Jackson shared the predominately western opinion that several small banks would be a better service to the nation than one, large bank would. A major problem with a national bank would lie in it’s willingness only to make loans to the wealthy. This would be of no use to the middleclass. Jackson would not allow Biddle to gain any more power than he already had.

With the Jackson administration into office, the Second Bank of the United States became threatened. President Jackson had a private prejudice that wasn’t party policy (Schlesinger 74). He hated banks, all banks, but he especially hated the Second Bank of the United States. He viewed all bankers as “little more than parasites who preyed upon the poor and honest working people of America” (Roughshod 2). The reason for his hatred most likely stemmed from his near ruin as a businessman (land speculator, merchant, and slaver trader) when in the 1790s he accepted some bank notes that turned out to be worthless. From then on, he never trusted anything but hard money, or specie (Roughshod 2).

James R. Sharp, "The Jacksonians versus the Banks: Politics in the States after the Panic of 1837" Columbia University Press 1970

The Bank of the United States was technically the second bank of the U.S. since the first bank’s charter ended in 1811. The second bank held a monopoly over federal deposits, provided credit to growing enterprises, issued banknotes that served as a dependable medium of exchange, and used a restraining effect on the less well-managed state banks. Jackson didn’t trust the bank and thought it had too much power, so Jackson sought out to destroy it. There were two different groups when it came to opposition, “soft-money” and “hard-money”. Soft money supporters were progressive, they believed in economic growth and bank speculation. They supported the use of paper money and were mainly made up of bankers and allies to bankers. Hard money supporters were against expansion and bank speculation. They supported coinage only and rejected all banks that used paper money, which included the federal bank. Jackson was a hard money supporter although, he felt sympathy to the soft money supporters. Jackson could not legally end the bank before its charter expired. By removing the

The first recession in American history triggered by the effects of capitalism, was The Panic of 1873. This crash was caused by some of the same reasons why our market continues to fail to this day. Issues such as the formation of financial bubbles, an imbalance in the regulation of currency and low interest rates all contribute to market failures such as these. In 1873, there was a severe problem with the control that the government had over money. Many people, including Jay Cooke and his investment firm, continued investing their money in railroad construction, gold, silver, stocks, and bonds, with the intention of the return being higher than the risk. Because of this, many factories and businesses had to shut down and unemployment skyrocketed.