Andrew Jackson hated the National Bank for a variety of reasons. Proud of being a self-made "common" man, he argued that the bank favored the wealthy. As a westerner, he feared the expansion of eastern business interests and the draining of specie from the west, so he portrayed the bank as a "hydra-headed" monster.
Although foreign ownership was not a problem (foreigners owned about 20% of the Bank's stock), the Second Bank was plagued with poor management and outright fraud (Galbraith). The Bank was supposed to maintain a "currency principle" -- to keep its specie/deposit ratio stable at about 20 percent.
Jackson's criticisms were shared by "anti-bank, hard money agrarians" as well as eastern financial interests, especially in New York City, who resented the national bank's restrictions on easy credit.
Debtors and southern farmers tended to oppose the Bank because of its constraints on loans and local availability of credit. Industrialists and creditors tended to support the Bank, however, because of the stability it helped establish in the national economy.
In 1833, Jackson retaliated against the bank by removing federal government deposits and placing them in "pet" state banks. But as the economy overheated and so did state dreams of infrastructure projects. Congress passed a law in 1836 that required the federal surplus to be distributed to the states in four payments.
D) the First Bank of North America and the Second Bank of North America. the First Bank of the United States had failed to serve as a lender of last resort. the Second Bank of the United States had failed to serve as a lender of last resort. the Federal Reserve System had failed to serve as a lender of last resort.
In its time, the institution was the largest monied corporation in the world. The essential function of the bank was to regulate the public credit issued by private banking institutions through the fiscal duties it performed for the U.S. Treasury, and to establish a sound and stable national currency.
In 1816, the second Bank of the United States was established in order to bring stability to the national economy, serve as the depository for national funds, and provide the government with the means of floating loans and transferring money across the country.
This bill passed Congress, but Jackson vetoed it, declaring that the Bank was "unauthorized by the Constitution, subversive to the rights of States, and dangerous to the liberties of the people." After his reelection, Jackson announced that the Government would no longer deposit Federal funds with the Bank and would
Accompanied by strong attacks against the Bank in the press, Jackson vetoed the Bank Recharter Bill. Jackson also ordered the federal government's deposits removed from the Bank of the United States and placed in state or "Pet" banks.
Answer: On September 10, 1833, Jackson removed all federal funds from the Second Bank of the U.S., redistributing them to various state banks, which were popularly known as “pet banks.” In addition, he announced that deposits to the bank would not be accepted after October 1.
The Bank met with considerable controversy. Secretary of State Thomas Jefferson believed the Bank was unconstitutional because it was an unauthorized extension of federal power. Congress, Jefferson argued, possessed only delegated powers which were specifically enumerated in the constitution.
The banking controversy was important in 1830's because Jackson did not approve of it's fraud and corruption after time. He further damaged the economy by decentralizing the nations B.U.S., leading to debts and government funds to be withdrawn from the bank.
The result of the destruction of the national bank was that paper money of uncertain value flooding the economy.
The events of the Bank War made Andrew Jackson's opponents absolutely furious, causing them to form a new party; the Whigs. This called into effect The Second American Political Party System. The whigs favored a strong national government and social reform. It was now an America divided between Whigs and Democrats.
Like many other westerner's, Jackson viewed the bank as a monopoly that favored wealthy Easterners and limited western growth.
If Jackson signed it into law, it might alienate voters in the West and South, jeopardizing Jackson's bid for a second term. If he vetoed the bill, the controversy might alienate voters in the Northeast. Jackson vetoed the renewal of the charter of the Second Bank of the U.S. in dramatic fashion.
