What followed the delivery of
Jackson’s veto of the 2nd BUS re-charter bill was a series of very
odd and very turbulent events. Together they brought about the premature
extinction of the Second Bank of the United States, set the stage for a
national financial crisis on the order of 1819, and cemented the reputation of
Andrew Jackson as the era’s single most indomitable and influential political
figure. Indeed, where it not for Jackson’s strength of will and forceful
personality I doubt very much the events that followed the defeat of re-charter
would have occurred the way that they did. While American presidents that have
served since Old Hickory at times skirted (or even stepped over) the edges of
legality and propriety, few did it so quite as unapologetically and with such abiding
self-righteousness. For that reason I find that discussing how the Bank War
ended carries with it a certain quality of unreality. The way Jackson
dictatorially steamrolled his opponents, violated established procedure and
good sense, and came away from the experience with a reputation for being a man
of the people, is quite frankly somewhat surreal. It is, I think, a testament
to the man’s charisma as well as to the social and political transformations
that were occurring in the United States in the 1830s, that what happened did
happen.
By
now I think I've sufficiently buried the lead.
In
spite of the fact that Henry Clay and the Congressional Whigs had attempted to
maneuver Jackson into confronting a potential veto of the 2nd BUS
re-charter bill, they were caught off-guard when the Old General actually followed
through on his stated dislike of the Bank. To defeat the president’s veto the
pro-bank forces in the Senate required a 2/3 or “supermajority” of the
delegates then seated (28 of 41). They managed only 22, and Jackson’s veto was
thus sustained on July 13th, 1832. The four months that followed
devolved into a rhetoric-strewn contest for the presidency as Jackson and his
supporters identified the conflict between the president and the Second Bank as one between “the People” and “the Aristocracy.” In order to perpetuate this
message the Democrats organized mass rallies, funded the publication of reams
of pamphlets, editorials and advertisements, and deployed their accustomed
assortment of popular songs and campaign memorabilia. Though based on a straightforward
accounting of the Jackson Administration’s various failures and centred on the
not-insubstantial accusation that the president was behaving in a tyrannical
fashion, the Whig efforts lacked their opponents’ populist vigor. To make
matters worse the Jacksonian press was given ample fodder to declare the Second
Bank entirely corrupt when its president Nicholas Biddle mounted his own very
public and very expensive campaign aimed at bringing about Jackson’s defeat.
The result was a sound thrashing for the Whigs: Jackson secured 219 electoral
votes to Clay’s 49. The popular vote was similarly lopsided, with 54% of voters
casting for Jackson (totalling just over 700,000) compared to 36% (just shy of
500,000) for Clay. If these don’t seem like particularly large figures it’s
important to recall that the United States had a population of only about 12
million in 1830.
Not
without reason, Jackson saw victory at the polls as a validation of his veto of
a renewal of the Second Bank’s charter and a mandate for its dismantling prior to
the expiration of its twenty-year lifespan. Thereafter discussions within the
cabinet, as well as with a loose collection of Jackson’s personal advisers, yielded
a series of concerns and a potential solution. Biddle, they asserted, could no
longer be trusted to administer the Second Bank in a responsible manner; his
behaviour during the re-charter debate and recent election, during which he
attempted to use Bank resources to influence the political process, clearly
demonstrated his appalling lack of impartiality. Likewise it was feared, in
retaliation for Jackson’s veto, that Biddle would make use of the means at his
disposal to engineer a financial crisis that could conceivably be blamed on the
president’s high-handed policies. In order to avert such a crisis, punish
Biddle, and protect the government funds then in the possession of the 2nd
BUS it was advised that Jackson order their removal to a series of state banks
specially selected for that purpose (based on their loyalty to the administration,
as it would happen). In order to facilitate this removal Jackson made a point
of questioning whether the 2nd BUS was a safe depositor of
government monies in his 4th State of the Union Address, delivered
in December, 1832. Though an investigation of the Second Bank aimed at
determining its continued suitability was within the power of the Treasury
Secretary to undertake, the president admitted, Congress may have been better
suited to the task. He further elaborated by stating that,
An inquiry into the transactions of
the institution, embracing the branches as well as the principal bank, seems
called for by the credit which is given throughout the country to many serious
charges impeaching its character, and which if true may justly excite the
apprehension that it is no longer a safe depository of the money of the people.
Notice no specific claims were made
against the Bank or its officers, and nor was Biddle mentioned by name. Likely
Jackson possessed no solid evidence of misdeed, and instead relied on suspicion
and mistrust to colour perceptions of the 2nd BUS. As well, take
note of the way Old Hickory, having formerly demonstrated his jealously of
Congressional authority by re-editing a section of his 1831 State of the Union
Address that he found too deferential, in 1832 seemed eager to bow to their
expertise at the expense of a member of his own cabinet. Jackson, it seemed,
was attempting to insinuate controversy; he hoped to conjure it up by invoking
unspoken rumour and spurring Congress to exercise its authority. Blunt as his
style of leadership often was, this was Jackson at his most deft.
Unfortunately
the results of the president’s attempt at careful manipulation were decidedly
mixed, and before long gave way to another of Old Hickory’s
pseudo-authoritarian outbursts. The Democratic-controlled House of
Representatives, as Jackson so subtly suggested, convened an investigation of
the Second Bank of the United States in order to determine the continued safety
of the government’s deposits. Though the committee assigned to the task was
divided internally they ultimately submitted a positive report of the Second
Bank’s operations (4 in favour to 3 against). James Polk, who had led the
anti-bank efforts in the House during the re-charter debate, led the minority
faction and objected strenuously and publicly to the continued trust of the 2nd
BUS by the federal government. Regardless, the House endorsed the committee’s
findings in March, 1833, and Jackson was forced to adopt a somewhat more direct
approach. Rather than await Congressional action, or even approval, the
president determined to remove the government deposits from the coffers of the
2nd BUS by executive authority alone. This strategy was made
possible by the fact that the 1816 charter of the Second Bank mandated that the
Treasury Secretary was authorized, with the assistance of Congress, to make all
decisions regarding the disposition of the government deposits. Because, prior
to the ratification of the Twentieth Amendment in 1933, Congress was out of
session between May and December of the year following a general election (such
as 1832), Old Hickory hoped to accomplish the removal in the absence of
Congressional approval. It was his hope that by the time the House of
Representatives reconvened in December, 1833 the demise of the 2nd
BUS would be already underway, and that the chamber would lack the political
will to reverse the process. Alas, Jackson very quickly hit upon a rather
substantial snag.
Jackson’s
Treasury Secretary Louis McLane, who had previously attempted to mediate a
compromise between the president and Nicholas Biddle in order to save the 2nd
BUS from being dismantled, recoiled when he asked to participate in the planned
removal. He replied to Jackson’s proposal to hasten the demise of the Bank that
the same Congress whose consultation was required if the government deposits
were to be tampered with had declared those same deposits perfectly safe.
Jackson responded by appointing pro-bank Secretary of State Edward Livingston
as Minister to France, shifting McLane into his place, and filling the
resulting vacancy with the Irish-born, and notably anti-bank, William Duane. Duane
took up his new position in June, 1833, and when faced with the removal plan
responded, much to Jackson’s frustration, in the same manner as his
predecessor. Despite the president’s claim of possessing a mandate from the
American people to bring about the demise of the 2nd BUS (thanks to
his tidy re-election), Duane reiterated that Congressional consultation was
required by law and refused to lend his hand to Jackson’s scheme. After several
months of a protracted stalemate, and with Congress set to reconvene in
December, the president declared his intention to go ahead with the removal on
his own authority, dismissed Duane in September, 1833, and appointed Attorney
General Taney in his place. By the start of October the removal process finally
began, with Taney carefully selecting state-chartered banks and transferring
funds slowly as to not suddenly and adversely gut the ability of the 2nd
BUS to regulate the American currency market. Biddle responded with a
deliberate credit contraction intended to convince Congress to resume the fight
for re-charter. Likely as not this only served to convince those who were still
uncertain of the wisdom of Jackson’s anti-bank initiative that the 2nd
BUS was in fact being administered irresponsibly.
Jackson’s
5th State of the Union Address was delivered upon the reconvening of
Congress in December, 1833. Therein he laid out his reasoning behind the
removal of the government deposits from the 2nd BUS and in turn why
he believed it was imperative to hasten the demise of America’s national bank.
Several aspects of this virtual denunciation are, I feel, particularly
noteworthy. One is the usage throughout the discussion of the Second Bank of
phrases like “public interest,” “public duty,” and “public money.” In light of
the rhetoric commonly deployed by Jackson and his Democratic Party allies I
wonder if it would not be entirely valid to translate “public” in these
instances as “the people.” Thus, the president was acting in defence of “the
people’s interests,” protecting “the people’s money,” and acting out of “duty
to the people.” Considering Old Hickory’s penchant for attempting to circumvent
or minimize the authority Congress and appeal directly to the common citizenry,
this strikes me as a valid substitution. Though Jackson at least partially
pursued the destruction of the Second Bank of the United States out of personal
conviction (having earlier in life learned to distrust paper currency), he thus
couched his public condemnations in distinctly public, or popular, terms. The
Second Bank was being de-legitimized as a government institution, not because
its existence violated the United States Constitution (though he believed it
did) or because the financial concepts under which it operated were personally
objectionable to the Chief Executive (though they were), but because it was a
clear and present threat to the public interest. The manifestations of this
threat included what Jackson referred to as the, “unquestionable proof that the
Bank of the United States was converted into a permanent electioneering
engine,” as well as the manner in which the Bank initiated a credit crunch in
an attempt to force the restoration of the federal government’s deposits.
Though he had in the past, and
would again in the future, Jackson appeared did not appear keen in his 5th
State of the Union to address the deficiencies of the 2nd BUS in
terms that were explicitly ideological or philosophical. It was not, Jackson
seemed to be saying, that the privileges enjoyed by the shareholders of the
Second Bank were distinctly anti-republican, but that in a practical,
utilitarian sense the institution was generating more harm than good. Its
capital, which included funds owned and deposited by the United States
government and which was intended to aid in the growth and regulation of the
American economy, was supposedly being put to use in order to influence the
course of popular elections. The credit it was equipped to extend, intended to
form the basis of a stable national paper currency, was allegedly being used as
a weapon aimed at punishing the policies of the executive branch and eliciting their
favourable reversal. The significance of these charges was clear and
unambiguous, and though Jackson laid them before Congress in December, 1833,
they seemed only partially to be his intended audience. Rather, it was “the
people” to which Jackson continually addressed himself in his 1833 message.
During the re-charter debate Biddle had directed a portion of the resources of
the Second Bank at securing favourable editorials from pro-bank Congressmen. As
Jackson characterised it, however, the people of the United States were being
deprived of the ability, “to govern through representatives chosen by their
unbiased suffrages,” by the, “money and power of a great corporation,” that
were being, “secretly exerted to influence their judgement and control their
decisions.” Per this equation the 2nd BUS was the perpetrator, the
American people were the victims, and Congress was the weapon.
Jackson continued to diminish
Congress during a passage of his 5th State of the Union in which he,
rather pointedly I would say, reiterated his efforts to alert the people’s
representatives to the possibility that the government deposits in possession
of the 2nd BUS were not safe. “I called the attention of Congress to
the subject,” he wrote, and, “I recommended the subject to Congress as worthy
of their serious investigation.” Of the report that the House of
Representatives’ Ways and Means Committee delivered, which found the deposits
to indeed be safe, Jackson stated, “The extent to which the examination thus
recommended was gone into is spread upon your journals, and it too well known
to require to be stated.” This would hardly seem like a ringing endorsement of
an investigation Congress undertook at the president’s urging. Jackson made his
latent disregard clearer in the paragraph that followed. After claiming that
while he had the utmost respect for the opinions or suggestions rendered, “by
the other departments of the Government or either of its branches,” the abuses
perpetrated by the Second Bank of the United States made unilateral executive
action a paramount necessity. Specifically, he wrote,
It will be seen from the brief views
at this time taken of the subject by myself, as well as the more ample ones
presented by the Secretary of the Treasury, that the change in the deposits
which has been ordered has been deemed to be called for by considerations which
are not affected by the [opinions and suggestions] referred to, and which, if
correctly viewed by that Department, rendered its act a matter of imperious
duty.
Essentially, Jackson believed that
the danger presented by the continued existence of the Second Bank of the
United States to the American people and their continued prosperity and
wellbeing was so great that circumventing the authority and discretion of
Congress was not only necessary, but imperative.
In
addition to being amusingly brusque of Jackson, considering that in the
following paragraph he implored Congress to sustain the removal, his
declaration that certain considerations relating to the well-being of the
American people were too important to be left to Congress alone is a highly significant
one. As I mentioned in the previous post, one of the peripheral arguments
Jackson deployed during his veto of the 2nd BUS re-charter bill
posited that banking, privately or by corporations, was a right every American
was entitled to exercise. If governments attempted to regulate or place limits
on how banks operated it was only in an attempt to ensure that the business practices
of the few did not visit harm upon society as a whole. Thus, when a state
government or the federal government granted a bank charter to a group of
investors that grant represented both a validation of the rights of those
investors as well as an acknowledgement on their part that certain limitations
as to how they chose to do business were necessary to preserving the public
good. Accordingly, if said investors and the corporation they together
comprised exercised their government-validated authority in such a way as to
bring harm to the public, it was the role – nay, the responsibility – of said
government as the paramount guardian of the public good to alter or abolish the
offending corporation as circumstances made necessary. This conception of corporations
would seem to necessitate a strong relationship between government and the
people; government both recognizes and protects the rights of the people (by
allowing them to form corporations) while ensuring that the expression of said
rights does not become ultimately harmful to society as a whole (by
constraining how corporations operate). I will add, though he did not say as
much in his veto message, that Jackson believed the president, being the only
public official in the United States elected on a nationwide basis, was the
ultimate arbiter of the people’s will. It thus, he felt, fell to him and him
alone to determine whether the people’s rights were being respected or whether
their expression had become generally harmful.
The
reason I ventured into this lengthy digression is because it strikes me that
the relationship Jackson described in his veto message between government,
corporations, and the people seems to be embodied in his description of why he
attempted to dismantle the 2nd BUS in his 1833 State of the Union
Address. Unlike the bulk of the veto message itself, which dealt with issues
like republicanism and the nature of privilege, constitutionalism, and
nationalism, Jackson's 5th State of the Union attempted to explain
the removal of government deposits from the Second Bank almost entirely in
terms of public utility. In his estimation the 2nd BUS was no longer
a safe depositor of government funds because it had attempted to use its
resources for the purpose of hijacking the democratic process and when faced
with the loss of official sanction had attempted to trigger a retaliatory
financial crisis. While Jackson may have been willing to admit, in theory, that
the shareholders of the 2nd BUS had a right to form and operate a
corporation (if not a monopoly), it was evidently his conviction that they had
voided said right via their disregard for basic considerations of public
utility. If Congress, the authority originally responsible for granting the
Second Bank its charter in 1816, failed to act in order to remedy the situation
Old Hickory believed it devolved upon his office to render a solution.
And so he did.
The Democratic-controlled House ultimately endorsed the
removal, in spite of the fact that they had earlier the same year endorsed a
report declaring the deposits safe in the hands of the 2nd BUS. They
went on to further reiterate that the Bank, “ought not to be rechartered.” The Whig-controlled
Senate seemed less concerned by the demise of the Bank, which had always been a
means to attack the Democrats rather than a cause they truly believed in, than
by Jackson’s breathtaking assumption of executive power. They roundly denounced
the president as a tyrannical autocrat who cared little for the law, and Henry
Clay memorably described Jackson as a “backwoods Caesar.” To that end the
Senate censured the president in March, 1834, an act which carried no legal
force (Clay was careful to point out) but which was intended to represent the
formal opinion of a specific branch of the United States government. The text of
the censure stated the Senate had, “Resolved that the President in the late
Executive proceedings in relation to the public revenue, has assumed upon
himself authority and power not confer’d by the Constitution and laws but in
derogation of both.” Old Hickory submitted a formal protest in response which
the Senate refused to publish in the journal of their proceedings. When the
Democrats took control of the upper house after the election of 1836, Senator
Thomas Hart Benton led a successful campaign to have the censure expunged from
the record.
The Second Bank of the United States, meanwhile, rode out
the remaining years of its charter term with a somewhat embittered Nicholas
Biddle still at the helm. When expiration came in 1836 it was granted a new
charter under the same name by the government of Pennsylvania. After
languishing for a few more years it suspended specie payments in 1839 and was
ultimately liquidated in 1841. Thus Jackson’s great foe was brought low and
vanquished.
On that cheery note,
Jackson’s 5th State of the Union: http://en.wikisource.org/wiki/Andrew_Jackson%27s_Fifth_State_of_the_Union_Address
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