States' Rights and the Economy

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1 States' Rights and the Economy * * * * * * * * * * * * Focus Question: How did old issues take a new shape in the conflict over a national bank and tariffs? *Jackson believed that common people needed support against powerful forces of wealth and this led him to take a strong stand against the Bank of the United States. Pros and cons? The Bank War *The second Bank of the United States earned strong support from business people between 1816 and the 1830s because it made loans to business and was a safe place for the federal gov't to keep its money. The paper money issued formed a stable currency and careful policies created confidence in banks across the country. *However, many Americans disliked the bank because they didn't like the way it restricted loans made by state banks, and often limited the amount of money the banks loaned. This made farmers and merchants wanting to borrow money to buy land angry. Many blamed the economic crisis of 1819 on the banks that caused many to lose their farms. *Andrew Jackson was an enemy of the bank because it allowed a small group of wealthy to better themselves at the expense of the ordinary man. The bank president Nicholas Biddle, who was from a wealthy Philadelphia family, was especially disliked by Jackson because he often did favors for powerful politicians. *Biddle got Congress to renew the bank's charter in 1832 before it had expired. Jackson vetoed the charter renewal and this became a major issue in the presidential election. Most voters supported Jackson s veto and he was re elected. *Jackson's re election showed that a determined President could stir up the people and face down powerful opponents in Congress. The second bank ceased to exist after its charter ran out in 1836 after Jackson left office and made it harder for the next President to end the crisis. Write a news report about Biddle's life and his association with the 2nd National Bank 1

2 The Question of States' Rights *Since the founding of our country, the issue of balance between the powers of the federal and state governments had been debated. *On one hand, the Constitutional Convention of 1787 had set up a gov't based on federalism which is the division of power between the federal and state levels. The Constitution gave the federal gov't many powers but at the same time, the 10th Amendment put a limit on federal power by allowing any powers not specifically given to the federal gov't to be reserved to the states. *Over time this issue had been tested by events such as the Alien and Sedition Acts and the Virginia and Kentucky Resolutions, but during Jackson's presidency these arguments caused a serious crisis. 2

3 The Nullification Crisis *In 1823 Congress passed a law raising the tariff on iron, textiles and other products, which caused the crisis to erupt. *The tariff helped manufacturers in the North and some of the West, but caused Southerners to pay more for their products which seemed unfair to them. *Vice President John Calhoun argued that states had the right of nullification (an action by a state that cancels a federal law to which the state objects). If this happened it would seriously weaken the federal gov't. Arguments for Nullification *Southerners wondered if the gov't could enforce what they saw as an unjust law, would they also have the power to end slavery? *Calhoun based his idea of nullification on his view of how the Union was formed. The Union grew from an agreement between various states and each state kept certain powers. One of those powers was the power to nullify federal laws the people of that state felt were unfair. Arguments against Nullification *Daniel Webster gave the clearest argument against nullification. He argued the United States had not been formed by the states, but by the entire American people. *Both Webster and Jackson defended the Union over the states for this reason that the power of the U.S. came from its people. *To Calhoun, states rights were more important than saving the Union. South Carolina Threatens to Secede *In 1832, Congress passed another tariff law on iron and textiles. *SC called a state convention at which they voted to nullify the tariffs and said these tariffs did not apply to South Carolina. It went further to say that if the federal gov't tried to use force to impose the tariffs, then SC would secede from the Union. *Jackson responded by putting federal troops in SC on alert and issuing a statement that "disunion by armed force is treason". *With tensions mounting Calhoun resigned as VP. *In 1833, Jackson asked Congress to allow the federal gov't to collect the tariff in SC by force if necessary and support a compromise bill to lower the tariffs. Congress passed both bills. *South Carolina was unable to win support for its position from other states and repealed its tariff nullification and the crisis was settled peacefully. *Federal power had won over states' rights for now, but the issue would continue to be debated until the Civil War began in

4 The End of the Jackson Era *After two terms Jackson retired from office. Martin Van Buren was Jackson s choice to succeed him. He was Sec. of State during Jackson s first term and Vice President during his second term. *In the election of 1836, the Whigs ran three candidates (each from a different region) in order to prevent any one candidate from receiving the majority of votes and putting the decision into the House of Representatives *The strategy didn't work since Van Buren received a majority of both electoral and popular votes. 4

5 The Panic of 1837 *Van Buren took office when Britain was experiencing an economic slowdown so their manufacturers bought less cotton. This caused cotton prices to fall sharply which caused banks to be unable to collect on loans to cotton growers and this caused hundreds of banks to go bankrupt. *The result was an economic collapse called the Panic of 1837 and the hard times that followed lasted six years and ruined Van Buren's presidency. The Whigs used it... 5

6 The Election of 1840 *Van Buren ran for reelection against William Henry Harrison. The tune also took aim at the incumbent president, Martin Van Buren, or "Little Van," as the Whig lyrics christened him. A footnote to that textbook version is that the Democrats also tried to affix a catchy moniker to their candidate. "Old Kinderhook," they dubbed him, in honor of Van Buren's birthplace of Kinderhook, N.Y. When supporters chanted it at rallies, the nickname stuck, and the universal affirmation "O.K." has remained in the lexicon ever since You may remember what "Tippecanoe and Tyler, too" actually meant. It was, in fact, a song praising Whig candidate William Henry Harrison, or "Old Tip," as he was known, and his running mate,. Harrison was the hero of the battle of Tippecanoe, a clash in present day Indiana between the Army and American Indian forces led by Tecumseh and a confederation of tribes. *The Whigs ran a campaign for Harrison using parades, barbecues and entertainment targeting ordinary voters and portrayed Harrison as a man of the people who would feel at home in a log cabin. This log cabin campaign worked and Harrison was elected ending the Age of Jackson. 6

7 Review Questions *What were the arguments for and against the second Bank of the United States? For: It helped business; it kept the federal money safe; it issued a stable currency; it created confidence in U.S. banks Against: It hurt farmers and small merchants; it restricted state banks; it helped the wealthy; it caused the economic crisis of 1819 *How does the Tenth Amendment limit federal powers? It states that any powers not specifically given to the federal government are reserved to the state government. *What was the position of Vice President John C.Calhoun on nullification? Calhoun believed that nullification was a right that individual states had. *What was the main cause of the Panic of 1837? The main cause was an economic crisis in Britain. 7

8 Study Guide What law was passed in 1823 that caused a crisis? Who did the tariff seem to help? hurt? why? What was Calhoun's argument for nullification? Why was Southern concern regarding national laws? Who argued against nullification? What was their argument? Which state voted for nullification of the tariff and threatened to secede? How did Jackson respond? What did Calhoun do? In 1833, what did Jackson ask Congress to do? How was the nullification crisis resolved peacefully? Who ran in the election of 1836? Who won? How? What was the Panic of 1837? What was the cause of it? What was the result of the panic? Who became president after Van Buren? What type of campaign did he run? 8

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