CHAPTER #13 The Age of Jackson SECTION #2 A New Spirit in the White House

1. CHAPTER #13 The Age of Jackson SECTION #2 A New Spirit in the White House

2. CHAPTER #13 The Age of Jackson SECTION #2 A New Spirit in the White House The National Bank -In 1816, Madison allowed the 2nd National Bank to be created -The 2nd National Bank had several tasks: 1. Hold the federal government’s money 2. Extend credit (control lending) 3. Determined money state banks received -This powerful institution was hated by farmers and merchants, however supported by wealthy elites -Nicholas Biddle was the President of the bank -In 1832 Biddle asked for the bank’s charter to be renewed Page 1

3. CHAPTER #13 The Age of Jackson SECTION #2 A New Spirit in the White House Jackson vs. the National Bank -Jackson and Biddle quarrel over the Bank -Henry Clay, presidential candidate and Speaker of the House in 1832, pushed the bank’s charter through congress -Jackson had to decide to sign or veto the bill -If Jackson signed it, he lost support from the South & West -If Jackson vetoed it, he lost support from the North & East -He vetoed it, leaving the 2nd National Bank with a charter lasting only until 1836 -Jackson won a sweeping victory in the presidential election Page 2

4. CHAPTER #13 The Age of Jackson SECTION #2 A New Spirit in the White House Election Results for 1832 Page 3

5. CHAPTER #13 The Age of Jackson SECTION #2 A New Spirit in the White House The Nation’s Money -Jackson had Treasury Secretary Roger Taney place federal funds in designated state banks -These banks became known as “Pet Banks” -To spite Jackson, Biddle began limiting the flow of money to state banks -Paper money quickly became scarce because state banks were not lending -The 2nd National Bank went out of business in 1836 because… 1. No federal funds coming in 2. No money to loan and make interest off 3. Its charter expired Page 4

6. CHAPTER #13 The Age of Jackson SECTION #2 A New Spirit in the White House Economic Crisis -Vice President Martin Van Buren won the presidency easily due to Jackson’s fame Page 5

7. CHAPTER #13 The Age of Jackson SECTION #2 A New Spirit in the White House Election Results for 1836 Page 6

8. Economic Crisis CHAPTER #13 The Age of Jackson SECTION #2 A New Spirit in the White House -Vice President Martin Van Buren won the presidency easily due to Jackson’s fame -With the bank charter expiring, state and local banks were free of federal influence -Banks began to loan more freely, printing more money not backed by specie -When western land speculation erupted, Jackson issued the Specie Circular, demanding land be purchased with specie -Most speculators (and banks) did not have enough specie to keep up with land prices -Land values dropped, citizens/speculators could not afford to pay of loans and the bank took over many properties Page 5

9. CHAPTER #13 The Age of Jackson SECTION #2 A New Spirit in the White House Economic Crisis Explained State banks short on money to loan No money loaned to state banks State banks short on money to loan No money loaned to local banks No money loaned to state banks No money loaned to local banks No National Bank No National Bank Supply & demand, land prices go up Speculators buy large amounts of land State & local banks print their own money Supply & demand, land prices go up Speculators buy large amounts of land State & local banks print their own money Loan to speculators Loan to speculators High land prices, too much paper money Not enough gold Prospect of profits, more land is purchased High land prices, too much paper money Not enough gold Jackson issues Specie Circular Jackson issues Specie Circular Farmers, merchants & speculators cannot pay back loans No money being made on speculation No land purchase, prices drop State & local banks lose money Farmers, merchants & speculators cannot pay back loans No money being made on speculation No land purchase, prices drop State & local banks lose money Less banks, less loans, less economic growth Less banks, less loans, less economic growth Land taken from citizens & speculators Banks must sell land at lower price to recover their losses Land taken from citizens & speculators Banks must sell land at lower price to recover their losses State & local banks begin to fail State & local banks begin to fail Page 7