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Sunday, May 23, 2021

Spoke 18: The Biblewheel and The 18th Century - The Present Banking System

  Spoke 18: The Biblewheel and The 18th Century

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The Present Banking System

The Bank of England was opened just 6 years shy of the 18th Century. If there is one thing in common in the 4 gospels, it was Jesus entering the Temple and overthrowing the moneychangers. Banking and taxation became a concern in the 19th century in the newly formed nation of America and protested against by President Andrew Jackson:

“Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table) I will rout you out!”



The Bank War was a political struggle that developed over the issue of rechartering the Second Bank of the United States (B.U.S.) during the presidency of Andrew Jackson (1829–1837). The affair resulted in the shutdown of the Bank and its replacement by state banks.
...
On January 30, 1835, what is believed to be the first attempt to kill a sitting President of the United States occurred just outside the United States Capitol. When Jackson was leaving through the East Portico after the funeral of South Carolina Representative Warren R. Davis, Richard Lawrence, an unemployed house painter from England, tried to shoot Jackson with two pistols, both of which misfired.[294] Jackson attacked Lawrence with his cane, and Lawrence was restrained and disarmed.[295] Lawrence offered a variety of explanations for the shooting. He blamed Jackson for the loss of his job. He claimed that with the President dead, "money would be more plenty", (a reference to Jackson's struggle with the Bank) and that he "could not rise until the President fell". Finally, Lawrence told his interrogators that he was a deposed English king—specifically, Richard III, dead since 1485—and that Jackson was his clerk.[296] He was deemed insane and was institutionalized.[297]

If the attempt to assassinate Andrew Jackson, Abraham Lincoln, John F Kennedy is due to the banking issues within the 4 Gospels there was the Sadducees planning to execute him after Jesus turned their money changing tables upside down:

[Matthew 21:12 KJV]
And Jesus went into the temple of God, and cast out all them that sold and bought in the temple, and overthrew the tables of the moneychangers, and the seats of them that sold doves,

[Mark 11:15 KJV]
And they come to Jerusalem: and Jesus went into the temple, and began to cast out them that sold and bought in the temple, and overthrew the tables of the moneychangers, and the seats of them that sold doves;

[Luke 19:45 KJV]
And he went into the temple, and began to cast out them that sold therein, and them that bought;

[Luke 19:46 KJV]
Saying unto them, It is written, My house is the house of prayer: but ye have made it a den of thieves.


[John 2:14 KJV]
And found in the temple those that sold oxen and sheep and doves, and the changers of money sitting:

[John 2:15 KJV]
And when he had made a scourge of small cords, he drove them all out of the temple, and the sheep, and the oxen; and poured out the changers' money, and overthrew the tables;



Bank War

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Bank War
Old Hickory and Bully Nick.jpg
Cartoon depicting the political conflict between Andrew Jackson and Nicholas Biddle over the Second Bank of the United States
Date1832–1836[1]
Parties to the civil conflict
Anti-Bank forcesPro-Bank forces
Lead figures

The Bank War was a political struggle that developed over the issue of rechartering the Second Bank of the United States (B.U.S.) during the presidency of Andrew Jackson (1829–1837). The affair resulted in the shutdown of the Bank and its replacement by state banks.

The Second Bank of the United States was established as a private organization with a 20-year charter, having the exclusive right to conduct banking on a national scale. The goal behind the B.U.S. was to stabilize the American economy by establishing a uniform currency and strengthening the federal government. Supporters of the Bank regarded it as a stabilizing force in the economy due to its ability to smooth out variations in prices and trade, extend credit, supply the nation with a sound and uniform currency, provide fiscal services for the treasury department, facilitate long-distance trade, and prevent inflation by regulating the lending practices of state banks.[2] Jacksonian Democrats cited instances of corruption and alleged that the B.U.S. favored merchants and speculators at the expense of farmers and artisans, appropriated public money for risky private investments and interference in politics, and conferred economic privileges on a small group of stockholders and financial elites, thereby violating the principle of equal opportunity. Some found the Bank's public–private organization to be unconstitutional, and argued that the institution's charter violated state sovereignty. To them, the Bank symbolized corruption while threatening liberty.

In early 1832, the president of the B.U.S., Nicholas Biddle, in alliance with the National Republicans under Senators Henry Clay (Kentucky) and Daniel Webster (Massachusetts), submitted an application for a renewal of the Bank's twenty-year charter four years before the charter was set to expire, intending to pressure Jackson into making a decision prior to the 1832 presidential election, in which Jackson would face Clay. When Congress voted to reauthorize the Bank, Jackson vetoed the bill. His veto message was a polemical declaration of the social philosophy of the Jacksonian movement that pitted "the planters, the farmers, the mechanic and the laborer" against the "monied interest".[3] The B.U.S. became the central issue that divided the Jacksonians from the National Republicans. Although the Bank provided significant financial assistance to Clay and pro-B.U.S. newspaper editors, Jackson secured an overwhelming election victory.

Fearing economic reprisals from Biddle, Jackson swiftly removed the Bank's federal deposits. In 1833, he arranged to distribute the funds to dozens of state banks. The new Whig Party emerged in opposition to his perceived abuse of executive power, officially censuring Jackson in the Senate. In an effort to promote sympathy for the institution's survival, Biddle retaliated by contracting Bank credit, inducing a mild financial downturn. A reaction set in throughout America’s financial and business centers against Biddle's maneuvers, compelling the Bank to reverse its tight money policies, but its chances of being rechartered were all but finished. The economy did extremely well during Jackson's time as president, but his economic policies, including his war against the Bank, are sometimes blamed for contributing to the Panic of 1837.

Resurrection of a national banking system[edit]

The First Bank of the United States was established at the direction of Treasury Secretary Alexander Hamilton in 1791. Hamilton supported the foundation of a national bank because he believed that it would increase the authority and influence of the federal government, effectively manage trade and commerce, strengthen the national defense, and pay the debt. It was subject to attacks from agrarians and constructionists led by Thomas Jefferson and James Madison. They believed that it was unconstitutional because the Constitution did not expressly allow for it, would infringe on the rights of the states, and would benefit a small group while delivering no advantage to the many, especially farmers. Hamilton's view won out and the Bank was created.[4] More states and localities began to charter their own banks. State banks printed their own notes which were sometimes used out-of-state, and this encouraged other states to establish banks in order to compete.[5] The bank, as established, acted as a source of credit for the US government, and as the only chartered interstate bank, but lacked the powers of a modern central bank: It did not set monetary policy, regulate private banks, hold their excess reserves, could not print fiat money (only coin money backed by its capitalization), or act as a lender of last resort.[6]

President Madison and Treasury Secretary Albert Gallatin supported recharter of the First Bank in 1811. They cited "expediency" and "necessity," not principle. Opponents of the Bank defeated recharter by a single vote in both the House and Senate in 1811.[7] State banks opposed recharter of the national bank because when state bank notes were deposited with the First Bank of the United States, the Bank would present these notes to state banks and demand gold in exchange, which limited the state banks' ability to issue notes and maintain adequate reserves of specie, or hard money. At that time, bank notes could be exchanged for a fixed value of gold or silver.[8]

An old stone building with pillars. Classical Greek style architecture.
The north façade of the Second Bank of the United States, facing Chestnut Street (2013)

The arguments in favor of reviving a national system of finance, as well as internal improvements and protective tariffs, were prompted by national security concerns during the War of 1812.[9] The chaos of the war had, according to some, "demonstrated the absolute necessity of a national banking system".[10] The push for the creation of a new national bank occurred during the post-war period of American history known as the Era of Good Feelings. There was a strong movement to increase the power of the federal government. Some people blamed a weak central government for America's poor performance during much of the War of 1812. Humiliated by its opposition to the war, the Federalist Party, founded by Hamilton, collapsed. Nearly all politicians joined the Republican Party, founded by Jefferson. It was hoped that the disappearance of the Federalist Party would mark the end of party politics. But even in the new single party system, ideological and sectional differences began to flare up once again over several issues, one of them being the campaign to recharter the Bank.[11]

In 1815, Secretary of State James Monroe told President Madison that a national bank "would attach the commercial part of the community in a much greater degree to the Government [and] interest them in its operations…This is the great desideratum [essential objective] of our system."[12] Support for this "national system of money and finance" grew with the post-war economy and land boom, uniting the interests of eastern financiers with southern and western Republican nationalists. The roots for the resurrection of the Bank of the United States lay fundamentally in the transformation of America from a simple agrarian economy to one that was becoming interdependent with finance and industry.[13][14] Vast western lands were opening for white settlement,[15] accompanied by rapid development, enhanced by steam power and financial credit.[16] Economic planning at the federal level was deemed necessary by Republican nationalists to promote expansion and encourage private enterprise.[17] At the same time, they tried to "republicanize Hamiltonian bank policy." John C. Calhoun, a representative from South Carolina and strong nationalist, boasted that the nationalists had the support of the yeomanry, who would now "share in the capital of the Bank".[18]

Despite opposition from Old Republicans led by John Randolph of Roanoke, who saw the revival of a national bank as purely Hamiltonian and a threat to state sovereignty,[19] but with strong support from nationalists such as Calhoun and Henry Clay, the recharter bill for the Second Bank of the United States was passed by Congress.[20][21] The charter was signed into law by Madison on April 10, 1816.[22] The Second Bank of the United States was given considerable powers and privileges under its charter. Its headquarters was established in Philadelphia, but it could create branches anywhere. It enjoyed the exclusive right to conduct banking on a national basis. It transferred Treasury funds without charge. The federal government purchased a fifth of the Bank's stock, appointed a fifth of its directors, and deposited its funds in the Bank. B.U.S. notes were receivable for federal bonds.[23]

"Jackson and Reform": Implications for the B.U.S.[edit]

Panic of 1819[edit]

A thin man with gray hair and a tall black collar and block overcoat. The inside of the overcoat is red.
President Andrew Jackson

The rise of Jacksonian democracy was achieved through harnessing the widespread social resentments and political unrest persisting since the Panic of 1819 and the Missouri Crisis of 1820.[24] The Panic was caused by the rapid resurgence of the European economy after the Napoleonic Wars, where improved agriculture caused the prices of American goods to drop, and a scarcity of specie due to unrest in the Spanish American colonies. The situation was exacerbated by the B.U.S. under Bank President William Jones through fraud and the rapid emission of paper money. He eventually began to call in loans, but nonetheless was removed by the Bank's directors. Langdon Cheves, who replaced Jones as president, worsened the situation by reducing the Bank's liabilities by more than half, lessening the value of Bank notes, and more than tripling the Bank's specie held in reserve. As a result, the prices of American goods abroad collapsed. This led to the failure of state banks and the collapse of businesses, turning what could have been a brief recession into a prolonged depression. Financial writer William Gouge wrote that "the Bank was saved and the people were ruined".[25]

After the Panic of 1819, popular anger was directed towards the nation's banks, particularly the B.U.S.[24] Many people demanded more limited Jeffersonian government, especially after revelations of fraud within the Bank and its attempts to influence elections.[26] Andrew Jackson, previously a major general in the United States Army and former territorial governor of Florida, sympathized with these concerns, privately blaming the Bank for causing the Panic by contracting credit. In a series of memorandums, he attacked the federal government for widespread abuses and corruption. These included theft, fraud, and bribery, and they occurred regularly at branches of the National Bank.[27] In Mississippi, the Bank did not open branches outside of the city of Natchez, making small farmers in rural areas unable to make use of its capital. Members of the planter class and other economic elites who were well-connected often had an easier time getting loans. According to historian Edward E. Baptist, "A state bank could be an ATM machine for those connected to its directors."[28]

One such example was in Kentucky, where in 1817 the state legislature chartered forty banks, with notes redeemable to the Bank of Kentucky. Inflation soon rose and the Kentucky Bank became in debt to the National Bank. Several states, including Kentucky, fed up with debt owed to the Bank and widespread corruption, laid taxes on the National Bank in order to force it out of existence. In McCulloch v. Maryland (1819), the Supreme Court ruled that the Bank was both constitutional and that, as an agent of the federal government, it could not be taxed.[29]

In 1819, Monroe appointed Nicholas Biddle of Philadelphia as Government Director of the Bank. In 1823, he was unanimously elected its president. According to early Jackson biographer James Parton, Biddle "was a man of the pen—quick, graceful, fluent, honorable, generous, but not practically able; not a man for a stormy sea and a lee shore".[30] Biddle believed that the Bank had the right to operate independently from Congress and the Executive, writing that "no officer of the Government, from the President downwards, has the least right, the least authority" to meddle "in the concerns of the Bank".[28]

Rise of Jackson[edit]

The end of the War of 1812 was accompanied by an increase in white male suffrage. Jackson, as a war hero, was popular with the masses. With their support, he ran for president in 1824.[31] The election turned into a five-way contest between Jackson, Calhoun, John Quincy AdamsWilliam H. Crawford, and Clay. All were members of the Republican Party, which was still the only political party in the country.[32] Calhoun eventually dropped out to run for vice president, lowering the number of candidates to four.[33] Jackson won decisive pluralities in both the Electoral College and the popular vote.[34] He did not win an electoral majority, which meant that the election was decided in the House of Representatives, which would choose among the top three vote-getters in the Electoral College. Clay finished fourth. However, he was also Speaker of the House, and he maneuvered the election in favor of Adams, who in turn made Clay Secretary of State, an office that in the past had served as a stepping stone to the presidency. Jackson was enraged by this so-called "corrupt bargain" to subvert the will of the people.[35] As president, Adams pursued an unpopular course by attempting to strengthen the powers of the federal government by undertaking large infrastructure projects and other ventures which were alleged to infringe on state sovereignty and go beyond the proper role of the central government. Division during his administration led to the end of the single party era. Supporters of Adams began calling themselves National Republicans. Supporters of Jackson became known as Jacksonians and, eventually, Democrats.[36]

In 1828, Jackson ran again. Most Old Republicans had supported Crawford in 1824. Alarmed by the centralization in the Adams administration, most of them flocked to Jackson.[37] The transition was made relatively easy by the fact that Jackson's own principles of government, including commitment to reducing the debt and returning power to the states, were largely in line with their own.[38] Jackson ran under the banner of "Jackson and Reform", promising a return to Jeffersonian principles of limited government and an end to the centralizing policies of Adams.[39] The Democrats launched a spirited and sophisticated campaign.[40] They characterized Adams as a purveyor of corruption and fraudulent republicanism, and a menace to American democracy.[41][42] At the heart of the campaign was the conviction that Andrew Jackson had been denied the presidency in 1824 only through a "corrupt bargain"; a Jackson victory promised to rectify this betrayal of the popular will.[43][44]

A stocky black-haired man with a white shirt, black bow-tie, and black suit
President of the Second Bank of the United States, Nicholas Biddle

Although slavery was not a major issue in Jackson's rise to the presidency,[38] it did sometimes factor into opposition to the Second Bank, specifically among those in the South who were suspicious of how augmented federal power at the expense of the states might affect the legality of slavery. Democrat Nathaniel Macon remarked, "If Congress can make banks, roads and canals under the Constitution, they can free any slave in the United States."[45] In 1820, John Tyler of Virginia wrote that "if Congress can incorporate a bank, it might emancipate a slave".[46]

Jackson was both the champion and beneficiary of the revival of the Jeffersonian North–South alliance.[47][48][49] The Jacksonian movement reasserted the Old Republican precepts of limited governmentstrict construction, and state sovereignty.[38] Federal institutions that conferred privileges producing "artificial inequality" would be eliminated through a return to strict constructionism.[50] The "planter of the South and the plain Republican of the North"[51] would provide the support, with the aid of universal white male suffrage.[52] In the end, Jackson won the election decisively, taking 56 percent of the popular vote and 68 percent of the electoral vote.[53]

The Jacksonian coalition had to contend with a fundamental incompatibility between its hard money and paper money factions, for which reason Jackson’s associates never offered a platform on banking and finance reform,[54][55] because to do so "might upset Jackson's delicately balanced coalition".[55] Jackson and other advocates of hard money believed that paper money was part of "a corrupting and demoralizing system that made the rich richer, and the poor poorer". Gold and silver was the only way of having a "fair and stable" currency.[56] The aversion to paper money went back before the American Revolution. Inflation caused during the Revolutionary War by printing enormous amounts of paper money added to the distrust, and opposition to it was a major reason for Hamilton's difficulties in securing the charter of the First Bank of the United States.[57] Supporters of soft money tended to want easy credit.[58] Aspiring entrepreneurs, a number of them on the cotton frontier in the American southwest, resented the Bank not because it printed paper money, but because it did not print more and loan it to them.[59] Banks have to lend more money than they take in. When banks lend money, new money is actually created, which is called "credit". This money has to be paper; otherwise, a bank can only lend as much as it takes in and hence new currency cannot be created out of nothing. Paper money was therefore necessary to grow the economy. Banks making too many loans would print an excess of paper money and deflate the currency. This would lead to lenders demanding that the banks take back their devalued paper in exchange for specie, as well as debtors trying to pay off loans with the same deflated currency, seriously disrupting the economy.[60]

Because of the failure to emphasize the distinction between hard money and paper money, as well as the Bank's popularity, the Second Bank of the United States was not a major issue in the 1828 elections.[61][62] In fact, Biddle voted for Jackson in the election.[63] Jackson himself, though naturally averse to the Bank, had recommended the establishment of a branch in Pensacola. He also signed a certificate with recommendations for president and cashier of the branch in Nashville. The Bank had largely recovered in the public eye since the Panic of 1819 and had grown to be accepted as a fact of life.[64] Its role in managing the nation's fiscal affairs was central. The Bank printed much of the nation's paper money, which made it a target for supporters of hard money, while also restricting the activities of smaller banks, which created some resentment from those who wanted easy credit. As of 1830, the Bank had $50 million in specie in reserve, approximately half the value of its paper currency. It tried to ensure steady growth by forcing state-chartered banks to keep specie reserves. This meant that smaller banks lent less money, but that their notes were more reliable.[65] Jackson would not publicly air his grievances with the B.U.S. until December 1829.[66]

Prelude to war[edit]

Initial attitudes[edit]

When Jackson entered the White House in March 1829, dismantling the Bank was not part of his reform agenda. Although the President harbored an antipathy toward all banks, several members of his initial cabinet advised a cautious approach when it came to the B.U.S. Throughout 1829, Jackson and his close advisor, William Berkeley Lewis, maintained cordial relations with B.U.S. administrators, including Biddle, and Jackson continued to do business with the B.U.S. branch bank in Nashville.[67][68][69]

The Second Bank's reputation in the public eye partially recovered throughout the 1820s as Biddle managed the Bank prudently during a period of economic expansion. Some of the animosity left over from the Panic of 1819 had diminished, though pockets of anti-B.U.S. sentiment persisted in some western and rural locales.[70][71] According to historian Bray Hammond, "Jacksonians had to recognize that the Bank's standing in public esteem was high."[72]

Unfortunately for Biddle, there were rumors that the Bank had interfered politically in the election of 1828 by supporting Adams. B.U.S. branch offices in Louisville, Lexington, Portsmouth, Boston, and New Orleans, according to anti-Bank Jacksonians, had loaned more readily to customers who favored Adams, appointed a disproportionate share of Adams men to the Bank's board of directors, and contributed Bank funds directly to the Adams campaign. Some of these allegations were unproven and even denied by individuals who were loyal to the President, but Jackson continued to receive news of the Bank's political meddling throughout his first term.[73] To defuse a potentially explosive political conflict, some Jacksonians encouraged Biddle to select candidates from both parties to serve as B.U.S. officers, but Biddle insisted that only one's qualifications for the job and knowledge in the affairs of business, rather than partisan considerations, should determine hiring practices.[74] In January 1829, John McLean wrote to Biddle urging him to avoid the appearance of political bias in light of allegations of the Bank interfering on behalf of Adams in Kentucky. Biddle responded that the "great hazard of any system of equal division of parties at a board is that it almost inevitably forces upon you incompetent or inferior persons in order to adjust the numerical balance of directors".[75]

By October 1829, some of Jackson’s closest associates, especially Secretary of State Martin Van Buren, were developing plans for a substitute national bank. These plans may have reflected a desire to transfer financial resources from Philadelphia to New York and other places.[76] Biddle carefully explored his options for persuading Jackson to support recharter.[77] He approached Lewis in November 1829 with a proposal to pay down the national debt. Jackson welcomed the offer and personally promised Biddle he would recommend the plan to Congress in his upcoming annual address, but emphasized that he had doubts as to the Bank's constitutionality. This left open the possibility that he could stymie the renewal of the Bank's charter should he win a second term.[78][79][80]

Annual address to Congress, December 1829[edit]

In his annual address to Congress on December 8, 1829,[81] Jackson praised Biddle's debt retirement plan, but advised Congress to take early action on determining the Bank's constitutionality and added that the institution had "failed in the great end of establishing a uniform and sound currency". He went on to argue that if such an institution was truly necessary for the United States, its charter should be revised to avoid constitutional objections.[66][82] Jackson suggested making it a part of the Treasury Department.[83]

Many historians agree that the claim regarding the Bank’s currency was factually untrue.[66][84][85][86][87] According to historian Robert V. Remini, the Bank exercised "full control of credit and currency facilities of the nation and adding to their strength and soundness".[66] The Bank's currency circulated in all or nearly all parts of the country.[83] Jackson's statements against the Bank were politically potent in that they served to "discharge the aggressions of citizens who felt injured by economic privilege, whether derived from banks or not".[88] Jackson’s criticisms were shared by "anti-bank, hard money agrarians"[89] as well as eastern financial interests, especially in New York City, who resented the national bank's restrictions on easy credit.[90][91] They claimed that by lending money in large amounts to wealthy well-connected speculators, it restricted the possibility for an economic boom that would benefit all classes of citizens.[59] After Jackson made these remarks, the Bank's stock dropped due to the sudden uncertainty over the fate of the institution.[92]

A few weeks after Jackson's address, Biddle began a multi-year, interregional public relations campaign designed to secure a new Bank charter. He helped finance and distribute thousands of copies of pro-B.U.S. articles, essays, pamphlets, philosophical treatises, stockholders' reports, congressional committee reports, and petitions.[93] One of the first orders of business was to work with pro-B.U.S. Jacksonians and National Republicans in Congress to rebut Jackson's claims about the Bank's currency. A March 1830 report authored by Senator Samuel Smith of Maryland served this purpose. This was followed in April by a similar report written by Representative George McDuffie of South Carolina. Smith's report stated that the B.U.S. provided "a currency as safe as silver; more convenient, and more valuable than silver, which ... is eagerly sought in exchange for silver".[94][95] This echoed the arguments of Calhoun during the charter debates in 1816.[96] After the release of these reports, Biddle went to the Bank's board to ask for permission to use some of the Bank's funds for printing and dissemination. The board, which was composed of Biddle and like-minded colleagues, agreed.[97] Another result of the reports was that the Bank's stock rose following the drop that it experienced from Jackson's remarks.[98]

A thin older man uses a sword to attack a snake with multiple human heads representing different public figures
political cartoon depicting Jackson battling the many-headed monster of the Bank

In spite of Jackson's address, no clear policy towards the Bank emerged from the White House. Jackson’s cabinet members were opposed to an overt attack on the Bank. The Treasury Department maintained normal working relations with Biddle, whom Jackson reappointed as a government director of the Bank.[99] Lewis and other administration insiders continued to have encouraging exchanges with Biddle, but in private correspondence with close associates, Jackson repeatedly referred to the institution as being "a hydra of corruption" and "dangerous to our liberties".[100] Developments in 1830 and 1831 temporarily diverted anti-B.U.S. Jacksonians from pursuing their attack on the B.U.S. Two of the most prominent examples were the Nullification Crisis and the Peggy Eaton Affair.[101][102] These struggles led to Vice President Calhoun's estrangement from Jackson and eventual resignation,[102][103] the replacement of all of the original cabinet members but one, as well as the development of an unofficial group of advisors separate from the official cabinet that Jackson's opponents began to call his "Kitchen Cabinet". Jackson's Kitchen Cabinet, led by the Fourth Auditor of the Treasury Amos Kendall and Francis P. Blair, editor of the Washington Globe, the state-sponsored propaganda organ for the Jacksonian movement, helped craft policy, and proved to be more anti-Bank than the official cabinet.[104][105][106]

Annual address to Congress, December 1830[edit]

In his second annual address to Congress on December 7, 1830, the president again publicly stated his constitutional objections to the Bank's existence.[107][108] He called for a substitute national bank that would be wholly public with no private stockholders. It would not engage in lending or land purchasing, retaining only its role in processing customs duties for the Treasury Department.[109][110][111] The address signaled to pro-B.U.S. forces that they would have to step up their campaign efforts.[77][112]

On February 2, 1831, while National Republicans were formulating a recharter strategy, Jacksonian Senator Thomas Hart Benton of Missouri launched an attack against the legitimacy of the Bank on the floor of the Senate, demanding an open debate on the recharter issue. He denounced the Bank as a "moneyed tribunal" and argued for "a hard money policy against a paper money policy".[113][114] After the speech was over, National Republican Senator Daniel Webster of Massachusetts called for a vote to end discussions on the Bank. It succeeded by a vote of 23 to 20, closer than he would have liked. According to Benton, the vote tally was "enough to excite uneasiness but not enough to pass the resolution".[114] The Globe, which was vigorously anti-B.U.S., published Benton's speech, earning Jackson's praise. Shortly after, the Globe announced that the President intended to stand for reelection.[114][105][106]

Recharter[edit]

Post-Eaton cabinet and compromise efforts[edit]

After replacing most of his original cabinet members, Jackson included two Bank-friendly executives in his new official cabinet: Secretary of State Edward Livingston of Louisiana and Secretary of the Treasury Louis McLane of Delaware.[115][116]

A dark-haired, partially bald man with a white shirt, white collar, and dark suit
Secretary of the Treasury Louis McLane

McLane, a confidant of Biddle,[117][118] impressed Jackson as a forthright and principled moderate on Bank policy. Jackson called their disagreements an "honest difference of opinion" and appreciated McLane's "frankness".[119] The Treasury Secretary's goal was to ensure that the B.U.S. survived Jackson’s presidency, even in a diminished condition.[120] He secretly worked with Biddle to create a reform package. The product presented to Jackson included provisions through which the federal government would reduce operations and fulfill one of Jackson's goals of paying down the national debt by March 1833. The debt added up to approximately $24 million, and McLane estimated that it could be paid off by applying $8 million through the sale of government stock in the Bank plus an additional $16 million in anticipated revenue. The liquidation of government stock would necessitate substantial changes to the Bank's charter, which Jackson supported. After the liquidation of the debt, future revenues could be applied to funding the military. Another part of McLane's reform package involved selling government lands and distributing the funds to states, a measure consistent with Jackson's overall belief in reducing the operations of the central government. With this accomplished, the administration would permit re-authorization of the national bank in 1836. In return, McLane asked that Jackson not mention the Bank in his annual address to Congress.[121] Jackson enthusiastically accepted McLane's proposal, and McLane personally told Biddle about his success. Biddle stated that he would have preferred that Jackson, rather than remaining silent on the question of recharter, would have made a public statement declaring that recharter was a matter for Congress to decide. Nonetheless, he agreed to the overall plan.[122]

These reforms required a rapprochement between Jackson and Biddle on the matter of recharter, with McLane and Livingston acting as liaisons.[109] The President insisted that no bill arise in Congress for recharter in the lead up to his reelection campaign in 1832, a request to which Biddle assented. Jackson viewed the issue as a political liability—recharter would easily pass both Houses with simple majorities—and as such, would confront him with the dilemma of approving or disapproving the legislation ahead of his reelection. A delay would obviate these risks.[123] Jackson remained unconvinced of the Bank's constitutionality.[124]

Annual address to Congress, December 1831[edit]

Jackson acceded to McLane's pleas for the upcoming annual address to Congress in December, assuming that any efforts to recharter the Bank would not begin until after the election.[125] McLane would then present his proposals for reform and delay of recharter at the annual Treasury Secretary's report to Congress shortly thereafter.[118][126]

Despite McLane's attempts to procure a modified Bank charter,[127] Attorney General Roger B. Taney, the only member of Jackson's cabinet at the time who was vehemently anti-B.U.S., predicted that ultimately Jackson would never relinquish his desire to destroy the national bank.[126][128] Indeed, he was convinced that Jackson had never intended to spare the Bank in the first place.[129] Jackson, without consulting McLane, subsequently edited the language in the final draft after considering Taney’s objections. In his December 6 address, Jackson was non-confrontational, but due to Taney's influence, his message was less definitive in its support for recharter than Biddle would have liked, amounting to merely a reprieve on the Bank’s fate.[125][129][130] The following day, McLane delivered his report to Congress. The report praised the Bank’s performance, including its regulation of state banks,[131] and explicitly called for a post-1832 rechartering of a reconfigured government bank.[125][132]

The enemies of the Bank were shocked and outraged by both speeches.[120][129] The Jacksonian press, disappointed by the president’s subdued and conciliatory tone towards the Bank,[123] launched fresh and provocative assaults on the institution.[133] McLane’s speech, despite its call for radical modifications and delay in recharter,[121] was widely condemned by Jacksonians. They described it as "Hamiltonian" in character, accused it of introducing "radical modifications" to existing Treasury policy and attacked it as an assault on democratic principles. For example, Representative Churchill C. Cambreleng wrote, "The Treasury report is as bad as it can possibly be—a new version of Alexander Hamilton's reports on a National Bank and manufacturers, and totally unsuited to this age of democracy and reform." Secretary of the Senate Walter Lowrie described it as "too ultra federal".[134] The Globe refrained from openly attacking Secretary McLane, but in lieu of this, reprinted hostile essays from anti-Bank periodicals.[125][120][135] After this, McLane secretly tried to have Blair removed from his position as editor of the Globe. Jackson found out about this after Blair offered to resign. He assured Blair that he had no intention of replacing him. Troubled by accusations that he had switched sides, Jackson said, "I had no temporizing policy in me."[135] Although he did not fire McLane, he kept him at a greater distance.[136] Taney's influence meanwhile continued to grow, and he became the only member of the President's official cabinet to be admitted to the inner circle of advisors in the Kitchen Cabinet.[137]

National Republican Party offensive[edit]

A brown-haired man with sideburns wearing a white shirt, white tie, and black suit
Senator Henry Clay

National Republicans continued to organize in favor of recharter.[138] Within days of Jackson's address, party members gathered at a convention on December 16, 1831, and nominated Senator Clay for president. Their campaign strategy was to defeat Jackson in 1832 on the Bank re-authorization issue.[133][138][139] To that end, Clay helped introduce recharter bills in both the House and Senate.[140]

Clay and Massachusetts Senator Daniel Webster warned Americans that if Jackson won reelection, he would abolish the Bank.[141] They felt secure that the B.U.S. was sufficiently popular among voters that any attack on it by the President would be viewed as an abuse of executive power. The National Republican leadership aligned themselves with the Bank not so much because they were champions of the institution, but more so because it offered what appeared to be the perfect issue on which to defeat Jackson.[133][139]

Administration figures, among them McLane, were wary of issuing ultimatums that would provoke anti-B.U.S. Jacksonians.[77][142] Biddle no longer believed that Jackson would compromise on the Bank question, but some of his correspondents who were in contact with the administration, including McDuffie, convinced the Bank president that Jackson would not veto a recharter bill. McLane and Lewis, however, told Biddle that the chances of recharter would be greater if he waited until after the election of 1832. "If you apply now," McLane wrote Biddle, "you assuredly will fail,—if you wait, you will as certainly succeed."[140] Most historians have argued that Biddle reluctantly supported recharter in early 1832 due to political pressure from Clay and Webster,[139][140][143] though the Bank president was also considering other factors. Thomas Cadwalader, a fellow B.U.S. director and close confidant of Biddle, recommended recharter after counting votes in Congress in December 1831. In addition, Biddle had to consider the wishes of the Bank's major stockholders, who wanted to avoid the uncertainty of waging a recharter fight closer to the expiration of the charter. Indeed, Jackson had predicted in his first annual message of 1829 that the Bank's stockholders would submit an early application to Congress.[144]

On January 6, 1832, bills for Bank recharter were introduced in both houses of Congress.[126][140] In the House of Representatives, McDuffie, as Chairman of the Ways and Means Committee, guided the bill to the floor.[145] Fellow Jacksonian George M. Dallas introduced the bill into the Senate.[139] Clay and Webster secretly intended to provoke a veto, which they hoped would damage Jackson and lead to his defeat.[139][146] They did however assure Biddle that Jackson would not veto the bill so close to the 1832 election. The proposals included some limited reforms by placing restrictions on the Bank's powers to own real estate and create new branches, give Congress the ability to prevent the Bank from issuing small notes, and allow the president to appoint one director to each branch of the Bank.[139]

Jacksonian counter-offensive[edit]

The alliance between Biddle and Clay triggered a counter-offensive by anti-B.U.S. forces in Congress and the executive branch.[139][147] Jackson assembled an array of talented and capable men as allies. Most notably, these were Thomas Hart Benton in the Senate and future president James K. Polk, member of the House of Representatives from Tennessee, as well as Blair, Treasury Auditor Kendall, and Attorney General Roger Taney in his cabinets.[148] On February 23, 1832, Jacksonian Representative Augustin Smith Clayton of Georgia introduced a resolution to investigate allegations that the Bank had violated its charter. The intent was to put pro-Bank forces on the defensive.[149][150] These delaying tactics could not be blocked indefinitely since any attempt to obstruct the inquiry would raise suspicions among the public. Many legislators benefited from the largesse supplied by Bank administrators.[126][149][151] The plan was approved, and a bipartisan committee was sent to Philadelphia to look into the matters. Clayton's committee report, once released, helped rally the anti-Bank coalition.[148]

The months of delay in reaching a vote on the recharter measure served ultimately to clarify and intensify the issue for the American people.[152] Jackson’s supporters benefited in sustaining these attacks on the Bank[153] even as Benton and Polk warned Jackson that the struggle was "a losing fight" and that the recharter bill would certainly pass.[152] Biddle, working through an intermediary, Charles Jared Ingersoll, continued to lobby Jackson to support recharter. On February 28, Cambreleng expressed hope that if the recharter bill passed, the President would "send it back to us with his veto—an enduring moment of his fame". The following day, Livingston predicted that if Congress passed a bill that Jackson found acceptable, the President would "sign it without hesitation". In the words of historian Bray Hammond, "This was a very large 'if,' and the secretary came to realize it."[154] Jackson decided that he had to destroy the Bank and veto the recharter bill. Many moderate Democrats, including McLane, were appalled by the perceived arrogance of the pro-Bank forces in pushing through early recharter and supported his decision. Indeed, Livingston was alone in the cabinet, for only he opposed a veto, and Jackson ignored him. Taney's influence grew immensely during this period, and Cambreleng told Van Buren that he was "the only efficient man of sound principles" in Jackson's official cabinet.[155]

Biddle traveled to Washington, D.C. to personally conduct the final push for recharter.[156][157] For the past six months he had worked in concert with B.U.S. branch managers to elicit signatures from citizens for pro-B.U.S. petitions that would be aired in Congress.[158] Congressmen were encouraged to write pro-Bank articles, which Biddle printed and distributed nationally.[159] Francis Blair at the Globe reported these efforts by the B.U.S. president in the legislative process as evidence of the Bank’s corrupting influence on free government.[156] After months of debate and strife, pro-B.U.S. National Republicans in Congress finally prevailed, winning reauthorization of the Bank's charter in the Senate on June 11 by a vote of 28 to 20.[160] The House was dominated by Democrats, who held a 141–72 majority, but it voted in favor of the recharter bill on July 3 by a tally of 107 to 85. Many Northern Democrats joined the anti-Jacksonians in supporting recharter.[161]

The final bill sent to Jackson's desk contained modifications of the Bank's original charter that were intended to assuage many of the President's objections. The Bank would have a new fifteen-year charter; would report to the Treasury Department the names of all of the Bank's foreign stockholders, including the amount of shares they owned; would face stiff penalties if it held onto property for longer than five years, and would not issue notes in denominations of less than twenty dollars. Jacksonians argued that the Bank often cheated small farmers by redeeming paper with discounted specie, meaning that a certain amount was deducted. They alleged that this was unfair to farmers and allowed creditors to profit without creating tangible wealth, while a creditor would argue that he was performing a service and was entitled to profit from it.[162] Biddle joined most observers in predicting that Jackson would veto the bill.[160] Not long after, Jackson became ill. Van Buren arrived in Washington on July 4, and went to see Jackson, who said to him, "The Bank, Mr. Van Buren, is trying to kill me, but I shall kill it."[159][163]

Veto[edit]

Contrary to the assurances Livingston had been rendering Biddle, Jackson determined to veto the recharter bill. The veto message was crafted primarily by members of the Kitchen Cabinet, specifically Taney, Kendall, and Jackson's nephew and aide Andrew Jackson Donelson. McLane denied that he had any part in it.[164] Jackson officially vetoed the legislation on July 10, 1832,[158] delivering a carefully crafted message to Congress and the American people.[165] One of the most "popular and effective documents in American political history",[166] Jackson outlined a major readjustment to the relative powers of the government branches.[167]

The executive branch, Jackson averred, when acting in the interests of the American people,[168] was not bound to defer to the decisions of the Supreme Court, nor to comply with legislation passed by Congress.[169][170] He believed that the Bank was unconstitutional and that the Supreme Court, which had declared it constitutional, did not have the power to do so without the "acquiesence of the people and the states".[171] Further, while previous presidents had used their veto power, they had only done so when objecting to the constitutionality of bills. By vetoing the recharter bill and basing most of his reasoning on the grounds that he was acting in the best interests of the American people, Jackson greatly expanded the power and influence of the president.[172] He characterized the B.U.S. as merely an agent of the executive branch, acting through the Department of the Treasury. As such, declared Jackson, Congress was obligated to consult the chief executive before initiating legislation affecting the Bank. Jackson had claimed, in essence, legislative power as president.[173] Jackson gave no credit to the Bank for stabilizing the country's finances[166] and provided no concrete proposals for a single alternate institution that would regulate currency and prevent over-speculation—the primary purposes of the B.U.S.[166][174][175] The practical implications of the veto were enormous. By expanding the veto, Jackson claimed for the president the right to participate in the legislative process. In the future, Congress would have to consider the president's wishes when deciding on a bill.[172]

The veto message was "a brilliant political manifesto"[176] that called for the end of monied power in the financial sector and a leveling of opportunity under the protection of the executive branch.[177] Jackson perfected his anti-Bank themes. He stated that one fifth of the Bank's stockholders were foreign and that, because states were only allowed to tax stock owned by their own citizens, foreign citizens could more easily accumulate it.[178] He pitted the idealized "plain republican" and the "real people"—virtuous, industrious and free[179][180]—against a powerful financial institution—the "monster" Bank,[181] whose wealth was purportedly derived from privileges bestowed by corrupt political and business elites.[69][182] Jackson's message distinguished between "equality of talents, of education, or of wealth", which could never be achieved, from "artificial distinctions", which he claimed the Bank promoted.[183] Jackson cast himself in populist terms as a defender of original rights, writing:

It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society-the farmers, mechanics, and laborers-who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government.[184]

To those who believed that power and wealth should be linked, the message was unsettling. Daniel Webster charged Jackson with promoting class warfare.[174][185][186] Webster was at around this time annually pocketing a small salary for his "services" in defending the Bank, although it was not uncommon at the time for legislators to accept monetary payment from corporations in exchange for promoting their interests.[187]

In presenting his economic vision,[188] Jackson was compelled to obscure the fundamental incompatibility of the hard-money and easy credit wings of his party.[189] On one side were Old Republican idealists who took a principled stand against all paper credit in favor of metallic money.[190] Jackson's message criticized the Bank as a violation of states' rights, stating that the federal government's "true strength consists in leaving individuals and States as much as possible to themselves."[184] Yet the bulk of Jackson’s supporters came from easy lending regions that welcomed banks and finance, as long as local control prevailed.[191] By diverting both groups in a campaign against the national bank in Philadelphia, Jackson cloaked his own hard-money predilections, which, if adopted, would be as fatal to the inflation favoring Jacksonians as the B.U.S. was purported to be.[192]

Despite some misleading or intentionally vague statements on Jackson's part in his attacks against the Bank, some of his criticisms are considered justifiable by certain historians. It enjoyed enormous political and financial power, and there were no practical limits on what Biddle could do. It used loans and "retainer's fees", such as with Webster, to influence congressmen. It assisted certain candidates for offices over others.[193] It also regularly violated its own charter. Senator George Poindexter of Mississippi received a $10,000 loan from the Bank after supporting recharter. Several months later, he received an additional loan of $8,000 despite the fact that the original loan had not been paid. This process violated the Bank's charter.[194]

Too late, Clay "realized the impasse into which he had maneuvered himself, and made every effort to override the veto".[195] In a speech to the Senate, Webster rebuked Jackson for maintaining that the president could declare a law unconstitutional that had passed Congress and been approved by the Supreme Court. Immediately after Webster spoke, Clay arose and strongly criticized Jackson for his unprecedented expansion, or "perversion", of the veto power. The veto was intended to be used in extreme circumstances, he argued, which was why previous presidents had used it rarely if at all. Jackson, however, routinely used the veto to allow the executive branch to interfere in the legislative process, an idea Clay thought "hardly reconcilable with the genius of representative government". Benton replied by criticizing the Bank for being corrupt and actively working to influence the 1832 election. Clay responded by sarcastically alluding to a brawl that had taken place between Thomas Benton and his brother Jesse against Andrew Jackson in 1813. Benton called the statement an "atrocious calumny". Clay demanded that he retract his statements. Benton refused and instead repeated them. A shouting match ensued in which it appeared the two men might come to blows. Order was eventually restored and both men apologized to the Senate, although not to each other, for their behaviors. The pro-Bank interests failed to muster a supermajority—achieving only a simple majority of 22–19 in the Senate[196]—and on July 13, 1832, the veto was sustained.[197]

The election of 1832[edit]

A man wearing a crown and thick robe holding a scepter stands over a pile of papers, one of which is marked as the "Constitution of the United States"
This cartoon, "King Andrew the First", depicted Jackson as a tyrannical king, trampling on the Constitution.

Jackson's veto immediately made the Bank the main issue of the 1832 election. With four months remaining until the November general election, both parties launched massive political offensives with the Bank at the center of the fight.[198][199] Jacksonians framed the issue as a choice between Jackson and "the People" versus Biddle and "the Aristocracy",[198][200] while muting their criticisms of banking and credit in general.[201] "Hickory Clubs" organized mass rallies, while the pro-Jackson press "virtually wrapped the country in anti-Bank propaganda".[202] This, despite the fact that two-thirds of the major newspapers supported Bank recharter.[203][204]

The National Republican press countered by characterizing the veto message as despotic and Jackson as a tyrant.[205] Presidential hopeful Henry Clay vowed "to veto Jackson" at the polls.[157][206] Overall, the pro-Bank analysis tended to soberly enumerate Jackson's failures, lacking the vigor of the Democratic Party press.[207] Biddle mounted an expensive drive to influence the election, providing Jackson with copious evidence to characterize Biddle as an enemy of republican government and American liberty through meddling in politics. Some of Biddle's aides brought this to his attention, but he chose not to take their advice.[201] He also had tens of thousands of Jackson's veto messages circulated throughout the country, believing that those who read it would concur in his assessment that it was in essence "a manifesto of anarchy" addressed directly to a "mob".[208] "The campaign is over, and I think we have won the victory", Clay said privately on July 21.[209]

Jackson's campaign benefited from superior organization skills. The first ever Democratic Party convention took place in May 1832. It did not officially nominate Jackson for president, but, as Jackson wished, nominated Martin Van Buren for vice president.[210] Jackson's supporters hosted parades and barbecues, and erected hickory poles as a tribute to Jackson, whose nickname was Old Hickory. Jackson typically chose not to attend these events, in keeping with the tradition that candidates not actively campaign for office. Nevertheless, he often found himself swarmed by enthusiastic mobs. The National Republicans, meanwhile, developed popular political cartoons, some of the first to be employed in the nation. One such cartoon was entitled "King Andrew the First". It depicted Jackson in full regal dress, featuring a scepter, ermine robe, and crown. In his left hand he holds a document labelled "Veto" while standing on a tattered copy of the Constitution.[211] Clay was also damaged by the candidacy of William Wirt of the Anti-Masonic Party, which took National Republican votes away in crucial states, mostly in the northeast. In the end, Jackson won a major victory with 54.6% of the popular vote, and 219 of the 286 electoral votes.[212] In Alabama, Georgia, and Mississippi, Jackson won with absolutely no opposition. He also won the states of New Hampshire and Maine, fracturing the traditional Federalist/National Republican dominance in New England.[213] The House also stood solidly for Jackson. The 1832 elections provided it with 140 pro-Jackson members compared to 100 anti-Jacksons.[214]

Jackson's dismantling of the B.U.S.[edit]

Renewal of war and 1832 address to Congress[edit]

Jackson regarded his victory as a popular mandate[215] to eliminate the B.U.S. before its 20-year term ended in 1836.[216][217] During the final phase of the 1832 election campaign, Kendall and Blair had convinced Jackson that the transfer of the federal deposits—20% of the Bank's capital—into private banks friendly to the administration would be prudent.[218] Their rationale was that Biddle had used the Bank's resources to support Jackson's political opponents in the 1824 and 1828 elections, and additionally, that Biddle might induce a financial crisis in retaliation for Jackson's veto and reelection.[219] The President declared the Bank "Scotched, not dead".[217][220]

In his December 1832 State of the Union Address, Jackson aired his doubts to Congress whether the B.U.S. was a safe depository for "the people's money" and called for an investigation.[217][220] In response, the Democratic-controlled House conducted an inquiry, submitting a divided committee report (4–3) that declared the deposits perfectly safe.[221] The committee's minority faction, under Jacksonian James K. Polk, issued a scathing dissent, but the House approved the majority findings in March 1833, 109–46.[220] Jackson, incensed at this "cool" dismissal, decided to proceed as advised by his Kitchen Cabinet to remove the B.U.S. funds by executive action alone.[222] The administration was temporarily distracted by the Nullification Crisis, which reached its peak intensity from the fall of 1832 through the winter of 1833.[223] With the crisis over, Jackson could turn his attention back to the Bank.[217]

Search for a Treasury secretary[edit]

Kendall and Taney began to seek cooperative state banks which would receive the government deposits. That year, Kendall went on a "summer tour" in which he found seven institutions friendly to the administration in which it could place government funds. The list grew to 22 by the end of the year.[224] Meanwhile, Jackson sought to prepare his official cabinet for the coming removal of the Bank's deposits.[221][225] Vice President Martin Van Buren tacitly approved the maneuver, but declined to publicly identify himself with the operation, for fear of compromising his anticipated presidential run in 1836.[226][227] Treasury Secretary McLane balked at the removal, saying that tampering with the funds would cause "an economic catastrophe", and reminded Jackson that Congress had declared the deposits secure.[228] Jackson subsequently shifted both pro-Bank cabinet members to other posts: McLane to the Department of State, and Livingston to Europe, as U.S. Minister to France.[229] The President replaced McLane with William J. Duane, a reliable opponent of the Bank from Pennsylvania.[229] Duane was a distinguished lawyer from Philadelphia whose father, also William Duane, had edited the Philadelphia Aurora, a prominent Jeffersonian newspaper. Duane's appointment, aside from continuing the war against the Second Bank, was intended to be a sign of the continuity between Jeffersonian ideals and Jacksonian democracy. "He's a chip of the old block, sir", Jackson said of the younger Duane.[230] McLane met Duane in December 1832 and urged him to accept appointment as Treasury Secretary. He sent a letter of acceptance to Jackson on January 13, 1833, and was sworn in on June 1.[231]

By the time Duane was appointed, Jackson and his Kitchen Cabinet were well-advanced in their plan to remove the deposits.[226][229] Despite their agreement on the Bank issue, Jackson did not seriously consider appointing Taney to the position. He and McLane had disagreed strongly on the issue, and his appointment would have been interpreted as an insult to McLane, who "vigorously opposed" the idea of Taney being appointed as his replacement.[232]

A middle-aged man with light brown moderately long hair sits on a green chair beside a table covered with a green cloth. There are books on the table. There is a red curtain behind the man.
Treasury Secretary Roger B. Taney

Under the Bank charter terms of 1816, the U.S. Secretary of the Treasury was empowered, with Congress, to make all decisions regarding the federal deposits.[233] On his first day at his post, Secretary Duane was informed by Kendall, who was in name his subordinate in the Treasury Department, that Duane would be expected to defer to the President on the matter of the deposits.[222][234][235] Duane demurred, and when Jackson personally intervened to explain his political mandate[215] to ensure the Bank’s demise,[236] his Treasury Secretary informed him that Congress should be consulted to determine the Bank's fate.[237][238] Van Buren had cautiously supported McLane's proposal to delay the matter until January 1, 1834. Jackson declined. To Van Buren, he wrote, "Therefore to prolong the deposits until after the meeting of Congress would be to do the very act [the B.U.S.] wishes, that is, to have it in its power to distress the community, destroy the state Banks, and if possible to corrupt congress and obtain two thirds, to recharter the Bank." Van Buren capitulated.[239]

Jackson's position ignited protest not only from Duane but also McLane and Secretary of War Lewis Cass.[240] After weeks of clashing with Duane over these prerogatives, Jackson decided that the time had come to remove the deposits.[241][242] On September 18, Lewis asked Jackson what he would do in the event that Congress passed a joint resolution to restore the deposits, Jackson replied, "Why, I would veto it." Lewis then asked what he would do if Congress overrode his veto. "Under such circumstances," he said, standing up, "then, sir, I would resign the presidency and return to the Hermitage." The following day, Jackson sent a messenger to learn whether Duane had come to a decision. Duane asked to have until the 21st, but Jackson, wishing to act immediately, sent Andrew Donelson to tell him that this was not good enough, and that he would announce his intention to summarily remove the deposits the next day in Blair's Globe, with or without Duane's consent. Sure enough, the following day, a notice appeared in the Globe stating that the deposits would be removed starting on or before October 1.[243] Secretary Duane had promised to resign if he and Jackson could not come to an agreement. When questioned by Jackson about this earlier promise, he said, "I indescreetly said so, sir; but I am now compelled to take this course." Under attack from the Globe,[244] Duane was dismissed by Jackson days later, on September 22, 1833.[237][241][245] Two days later, McLane and Cass, feeling Jackson had ignored their advice, met with the President and suggested that they resign. They eventually agreed to stay on the condition that they would attend to their own departments and not say anything publicly which would bolster the Bank's standing.[240]

Attorney General Taney was immediately made Secretary of the Treasury[237][246] in order to authorize the transfers, and he designated Kendall as special agent in charge of removal. With the help of Navy Secretary Levi Woodbury, they drafted an order dated September 25 declaring an official switch from national to deposit banking. Beginning on October 1, all future funds would be placed in selected state banks, and the government would draw on its remaining funds in the B.U.S. to cover operating expenses until those funds were exhausted. In case the B.U.S. retaliated, the administration decided to secretly equip a number of the state banks with transfer warrants, allowing money to be moved to them from the B.U.S. These were to be used only to counteract any hostile behavior from the B.U.S.[247]

Removal of the deposits and panic of 1833–34[edit]

Taney, in his capacity as an interim treasury secretary, initiated the removal of the Bank's public deposits, spread out over four quarterly installments. Most of the state banks that were selected to receive the federal funds had political and financial connections with prominent members of the Jacksonian Party. Opponents referred to these banks derisively as "pet banks" since many of them financed pet projects conceived by members of the Jackson administration.[248] Taney attempted to move tactfully in the process of carrying out the removals so as not to provoke retaliation by the B.U.S. or eviscerate the national bank's regulatory influence too suddenly. He presented five state-charted "pet" banks with drafts endorsed by the U.S. Treasury totaling $2.3 million. If Biddle presented any of the state banks with notes and demanded specie as payment, the banks could present him with the drafts to remove the deposits from the Bank and protect their liquidity. However, one of the banks drew prematurely on B.U.S. reserves for speculative ventures.[249] At least two of the deposit banks, according to a Senate report released in July 1834, were caught up in a scandal involving Democratic Party newspaper editors, private conveyance firms, and elite officers in the Post Office Department.[250] Jackson predicted that within a matter of weeks, his policy would make "Mr. Biddle and his Bank as quiet and harmless as a lamb".[251]

Biddle urged the Senate to pass joint resolutions for the restoration of the deposits. He planned to use "external pressure" to compel the House to adopt the resolutions. Clay demurred. Historian Ralph C.H. Catterall writes, "Just as in 1832 Biddle cared 'nothing for the campaign,' so in 1833 Henry Clay cared little or nothing for the bank." Webster and John C. Calhoun, who was now a senator, broke away from Clay. Webster drafted a plan to charter the Bank for 12 years, which received support from Biddle, but Calhoun wanted a 6 year charter, and the men could not come to an agreement.[252]

In the end, Biddle responded to the deposit removal controversy in ways that were both precautionary and vindictive. On October 7, 1833, Biddle held a meeting with the Bank's board members in Philadelphia. There, he announced that the Bank would raise interest rates in the coming months in order to stockpile the Bank's monetary reserves.[253] In addition, Biddle reduced discounts, called in loans, and demanded that state banks honor the liabilities they owed to the B.U.S. At least partially, this was a reasonable response to several factors that threatened the Bank's resources and continued profitability. Jackson's veto and the decreasing likelihood of obtaining a new federal charter meant that the Bank would soon have to wind up its affairs. Then there was the removal of the public deposits, congressional testimony indicating that the Jacksonians had attempted to sabotage the Bank's public image and solvency by manufacturing bank runs at branch offices in Kentucky, the responsibility of maintaining a uniform currency, the administration's goal of retiring the public debt in a short period, bad harvests, and expectations that the Bank would continue to lend to commercial houses and return dividends to stockholders.[254] "This worthy President thinks that because he has scalped Indians and imprisoned Judges, he is to have his way with the Bank. He is mistaken", Biddle declared.[251]

Yet there was also a more punitive motivation behind Biddle's policies. He deliberately instigated a financial crisis to increase the chances of Congress and the President coming together in order to compromise on a new Bank charter, believing that this would convince the public of the Bank's necessity.[255] In a letter to William Appleton on January 27, 1834, Biddle wrote:

[T]he ties of party allegiance can only be broken by the actual conviction of distress in the community. Nothing but the evidence of suffering abroad will produce any effect in Congress ... I have no doubt that such a course will ultimately lead to the restoration of the currency and the recharter of the Bank.[256]

At first, Biddle's strategy was successful. As credit tightened across the country, businesses closed and men were thrown out of work. Business leaders began to think that deflation was the inevitable consequence of removing the deposits, and so they flooded Congress with petitions in favor of recharter.[257] By December, one of the President's advisors, James Alexander Hamilton, remarked that business in New York was "really in very great distress, nay even to the point of General Bankruptcy [sic]".[258] Calhoun denounced the removal of funds as an unconstitutional expansion of executive power.[259] He accused Jackson of ignorance on financial matters.[260]

Jackson, however, believed that large majorities of American voters were behind him. They would force Congress to side with him in the event that pro-Bank congressmen attempted to impeach him for removing the deposits. Jackson, like Congress, received petitions begging him to do something to relieve the financial strain. He responded by referring them to Biddle.[261] When a New York delegation visited him to complain about problems being faced by the state's merchants, Jackson responded saying:

Go to Nicholas Biddle. We have no money here, gentlemen. Biddle has all the money. He has millions of specie in his vaults, at this moment, lying idle, and yet you come to me to save you from breaking. I tell you, gentlemen, it's all politics.[262]

The men took Jackson's advice and went to see Biddle, whom they discovered was "out of town".[263] Biddle rejected the idea that the Bank should be "cajoled from its duty by any small driveling about relief to the country."[264] Not long after, it was announced in the Globe that Jackson would receive no more delegations to converse with him about money. Some members of the Democratic Party questioned the wisdom and legality of Jackson's move to terminate the Bank through executive means before its 1836 expiration. But Jackson's strategy eventually paid off as public opinion turned against the Bank.[259][265]

Origins of the Whig Party and censure of President Jackson[edit]

By the spring of 1834, Jackson's political opponents—a loosely-knit coalition of National Republicans, anti-Masons, evangelical reformers, states' rights nullifiers, and some pro-B.U.S. Jacksonians—gathered in Rochester, New York to form a new political party. They called themselves Whigs after the British party of the same name. Just as British Whigs opposed the monarchy, American Whigs decried what they saw as executive tyranny from the president.[266][267] Philip Hone, a New York merchant, may have been the first to apply the term in reference to anti-Jacksonians, and it became more popular after Clay used it in a Senate speech on April 14. "By way of metempsychosis," Blair jeered, "ancient Tories now call themselves Whigs."[266] Jackson and Secretary Taney both exhorted Congress to uphold the removals, pointing to Biddle's deliberate contraction of credit as evidence that the central bank was unfit to store the nation's public deposits.[268]

The response of the Whig-controlled Senate was to try to express disapproval of Jackson by censuring him.[269][270] Henry Clay, spearheading the attack, described Jackson as a "backwoods Caesar" and his administration a "military dictatorship".[271] Jackson retaliated by calling Clay as "reckless and as full of fury as a drunken man in a brothel".[272] On March 28, Jackson was officially censured for violating the U.S. Constitution by a vote of 26–20.[273] The reasons given were both the removal of the deposits and the dismissal of Duane.[274] The opposing parties accused one another of lacking credentials to represent the people. Jacksonian Democrats pointed to the fact that Senators were beholden to the state legislatures that selected them; the Whigs pointing out that the chief executive had been chosen by electors, and not by popular vote.[275]

The House of Representatives, controlled by Jacksonian Democrats, took a different course of action. On April 4, it passed resolutions in favor of the removal of the public deposits.[268][276] Led by Ways and Means Committee chairman James K. Polk, the House declared that the Bank "ought not to be rechartered" and that the deposits "ought not to be restored". It voted to continue allowing the deposit banks to serve as fiscal agents and to investigate whether the Bank had deliberately instigated the panic. Jackson called the passage of these resolutions a "glorious triumph", for it had essentially sealed the Bank's destruction.[277]

When House committee members, as dictated by Congress, arrived in Philadelphia to investigate the Bank, they were treated by the Bank's directors as distinguished guests. The directors soon stated, in writing, that the members must state in writing their purpose for examining the Bank's books before any would be turned over to them. If a violation of charter was alleged, the specific allegation must be stated. The committee members refused, and no books were shown to them. Next, they asked for specific books, but were told that it might take up to 10 months for these to be procured. Finally, they succeeded in getting subpoenas issued for specific books. The directors replied that they could not produce these books because they were not in the Bank's possession. Having failed in their attempt to investigate, the committee members returned to Washington.[278]

In Biddle's view, Jackson had violated the Bank's charter by removing the public deposits, meaning that the institution effectively ceased functioning as a national bank tasked with upholding the public interest and regulating the national economy. Thenceforth, Biddle would only consider the interests of the Bank's private stockholders when he crafted policy.[279] When the committee members reported their findings to the House, they recommended that Biddle and his fellow directors be arrested for "contempt" of Congress, although nothing came of the effort.[280] Nevertheless, this episode caused an even greater decline in public opinion regarding the Bank, with many believing that Biddle had deliberately evaded a congressional mandate.[281]

The Democrats did suffer some setbacks. Polk ran for Speaker of the House to replace Andrew Stevenson, who was nominated to be minister to Great Britain. After southerners discovered his connection to Van Buren, he was defeated by fellow Tennessean John Bell, a Democrat-turned-Whig who opposed Jackson's removal policy. The Whigs, meanwhile, began to point out that several of Jackson's cabinet appointees, despite having acted in their positions for many months, had yet to be formally nominated and confirmed by the Senate. For the Whigs, this was blatantly unconstitutional. The unconfirmed cabinet members, appointed during a congressional recess, consisted of McLane for Secretary of State, Benjamin F. Butler for Attorney General, and Taney for Secretary of the Treasury. McLane and Butler would likely receive confirmation easily, but Taney would definitely be rejected by a hostile Senate. Jackson had to submit all three nominations at once, and so he delayed submitting them until the last week of the Senate session on June 23. As expected, McLane and Butler were confirmed. Taney was rejected by a vote of 28–18. He resigned immediately. To replace Taney, Jackson nominated Woodbury, who, despite the fact that he also supported removal, was confirmed unanimously on June 29. Meanwhile, Biddle wrote to Webster successfully urging the Senate not to support Stevenson as minister.[282]

The Bank's final years[edit]

Demise of the Bank of the United States[edit]

The economy improved significantly in 1834. Biddle received heavy criticism for his contraction policies, including by some of his supporters, and was compelled to relax his curtailments. The Bank's Board of Directors voted unanimously in July to end all curtailments.[283][284][285] The Coinage Act of 1834 passed Congress on June 28, 1834. It had considerable bipartisan support, including from Calhoun and Webster. The purpose of the act was to eliminate the devaluation of gold in order for gold coins to keep pace with market value and not be driven out of circulation. The first Coinage Act was passed in 1792 and established a 15 to 1 ratio for gold to silver coins. Commercial rates tended towards about 15.5-1. Consequentially a $10 gold eagle was really worth $10.66 and 2/3. It was undervalued and thus rarely circulated. The act raised the ratio to 16 to 1. Jackson felt that, with the Bank prostrate, he could safely bring gold back. It was not as successful as Jackson hoped.[286] However, it did have a positive effect on the economy, as did good harvests in Europe. The result was that the recession that began with Biddle's contraction was brought to a close.[283][284] For his part, Jackson expressed his willingness to recharter the Bank or establish a new one, but first insisted that his "experiment" in deposit banking be allowed a fair trial.[287]

Censure was the "last hurrah" of the Pro-Bank defenders and soon a reaction set in. Business leaders in American financial centers became convinced that Biddle's war on Jackson was more destructive than Jackson's war on the Bank.[288][289][290] All recharter efforts were now abandoned as a lost cause.[269] The national economy following the withdrawal of the remaining funds from the Bank was booming and the federal government through duty revenues and sale of public lands was able to pay all bills. On January 1, 1835, Jackson paid off the entire national debt, the only time in U.S. history that has been accomplished.[291] The objective had been reached in part through Jackson's reforms aimed at eliminating the misuse of funds, and through the veto of legislation he deemed extravagant.[292] In December 1835, Polk defeated Bell and was elected Speaker of the House.[293]

A very large man with dark hair and sideburns. He is wearing a white shirt, dark bow-tie, and dark suit.
Senator Thomas Hart Benton of Missouri

On January 30, 1835, what is believed to be the first attempt to kill a sitting President of the United States occurred just outside the United States Capitol. When Jackson was leaving through the East Portico after the funeral of South Carolina Representative Warren R. DavisRichard Lawrence, an unemployed house painter from England, tried to shoot Jackson with two pistols, both of which misfired.[294] Jackson attacked Lawrence with his cane, and Lawrence was restrained and disarmed.[295] Lawrence offered a variety of explanations for the shooting. He blamed Jackson for the loss of his job. He claimed that with the President dead, "money would be more plenty", (a reference to Jackson's struggle with the Bank) and that he "could not rise until the President fell". Finally, Lawrence told his interrogators that he was a deposed English king—specifically, Richard III, dead since 1485—and that Jackson was his clerk.[296] He was deemed insane and was institutionalized.[297] Jackson initially suspected that a number of his political enemies might have orchestrated the attempt on his life. His suspicions were never proven.[298]

In January 1837, Benton introduced a resolution to expunge Jackson's censure from the Senate record.[299] It began nearly 13 consecutive hours of debate. Finally, a vote was taken, and it was decided 25–19 to expunge the censure. Thereafter, the Secretary of the Senate retrieved the original manuscript journal of the Senate and opened it to March 28, 1834, the day that the censure was applied. He drew black lines through the text recording the censure and beside it wrote: "Expunged by order of the Senate, this 16th day of January, 1837". Jackson proceeded to host a large dinner for the "expungers".[300] Jackson left office on March 4 of that year and was replaced by Van Buren.[301] Including when taking into account the recession engineered by Biddle, the economy expanded at an unprecedented rate of 6.6% per year from 1830 to 1837.[302]

In February 1836, the Bank became a private corporation under Pennsylvania commonwealth law. This took place just weeks before the expiration of the Bank's charter. Biddle had orchestrated the maneuver in a desperate effort to keep the institution alive rather than allowing it to dissolve.[1] This managed to keep the Philadelphia branch operating at a price of nearly $6 million. In trying to keep the Bank alive, Biddle borrowed large sums of money from Europe and attempted to make money off the cotton market. Cotton prices eventually collapsed because of the depression (see below), making this business unprofitable. In 1839, Biddle submitted his resignation as Director of the B.U.S. He was subsequently sued for nearly $25 million and acquitted on charges of criminal conspiracy, but remained heavily involved in lawsuits until the end of his life.[303] The Bank suspended payment in 1839.[304] After an investigation exposed massive fraud in its operations, the Bank officially shut its doors on April 4, 1841.[305]

Speculative boom and Panic of 1837[edit]

Jackson's destruction of the B.U.S. is believed by some to have helped set in motion a series of events that would eventually culminate in a major financial crisis known as the Panic of 1837. The origins of this crisis can be traced to the formation of an economic bubble in the mid-1830s that grew out of fiscal and monetary policies passed during Jackson's second term, combined with developments in international trade that concentrated large quantities of gold and silver in the United States.[306] Among these policies and developments were the passage of the Coinage Act of 1834, actions pursued by Mexican President Antonio Lopez de Santa Anna, and a financial partnership between Biddle and Baring Brothers, a major British merchant banking house.[307] British investment in the stocks and bonds that capitalized American transportation companies, municipal governments, and state governments added to this phenomenon.[308]

Woodbury ensured that banks' specie ratios remained consistent with those of the early 1830s.[309] However, since lending was tied directly to the amount of gold and silver that banks stored in their vaults, the influx of precious metals into the United States encouraged American banks to print more paper money. The money supply and number of bank notes in circulation increased significantly in these years.[310] State-chartered financial institutions, unshackled from the regulatory oversight previously provided by the B.U.S., started engaging in riskier lending practices that fueled a rapid economic expansion in land sales, internal improvement projects, cotton cultivation, and slavery.[311] The federal government earned an average of about $2 million each year from land sales in the 1820s. This number increased to about $5 million in 1834, $15 million in 1835, and $25 million in 1836.[309] In 1836, President Jackson signed the Deposit and Distribution Act, which transferred funds from the Treasury Department’s budget surplus into various deposit banks located in the interior of the country. The treasury secretary could no longer regulate lending requirements in the deposit banks as a result of this legislation. Soon afterward, Jackson signed the Specie Circular, an executive order mandating that sales of public lands in parcels over 320 acres be paid for only in gold and silver coin. Both of these measures diverted precious metals from the Atlantic Coast to western regions, leaving the nation’s financial centers vulnerable to external shocks.[312][313]

Another major problem was that bountiful crop harvests in cotton from the United States, Egypt, and India created a supply glut.[314] The resulting drop in the price of cotton precipitated much of the damage of the financial panic. This is because cotton receipts not only gave value to many American credit instruments, but they were inextricably linked to the bubble then forming in the American Southwest (then centered in Louisiana and Mississippi).[315][316] Southern planters bought large amounts of public land and produced more cotton to try to pay off their debts. The price of cotton steadily declined during Jackson's second term. In late 1836, the Bank of England began denying credit to American cotton producers. The Bank's directors raised interest rates from three to five percent and restricted some of the open trade practices that they had previously granted to American import merchants. The directors had grown alarmed that their specie reserves had dwindled to four million pounds, which they blamed on the purchase of American securities and poor harvests that forced England to import much of its food (if food imports created a trade deficit, this could lead to specie exports). Within months, cotton prices entered a full free-fall.[317][318][319]

In March 1837, Hermann, Briggs & Company, a major cotton commission house in New Orleans, declared bankruptcy, prompting the New York bill brokerage company, J.L. & S. Joseph & Company, to do the same.[320][321] In May, New York banks suspended specie payments, meaning that they refused to redeem credit instruments in specie at full face value.[322][323] Over the next several years, domestic trade slumped, the price of banking, railroad, and insurance company stocks declined, and unemployment rose.[324] 194 of the 729 banks with charters closed their doors.[325] Thousands of people in manufacturing districts lost their jobs as credit dried up.[326][327] Farmers and planters suffered from price deflation and debt-default spirals. By the summer of 1842, eight states and the Florida territory had defaulted on their debts, which outraged international investors.[328]

Whigs and Democrats blamed each other for the crisis. The Whigs attacked Jackson's specie circular and demanded recharter of the Bank. Democrats defended the circular and blamed the panic on greedy speculators. Jackson insisted that the circular was necessary because allowing land to be purchased with paper would only fuel speculator greed more, thereby worsening the crisis. The circular, he claimed, was necessary to prevent excessive speculation.[329]

Legacy[edit]

The Bank War far from settled the status of banking in the United States. Van Buren's solution to the Panic of 1837 was to create an Independent Treasury, where public funds would be managed by government officials without assistance from banks.[330] A coalition of Whigs and conservative Democrats refused to pass the bill. It was not until 1840 that the Independent Treasury system was finally approved.[331] When Whig candidate William Henry Harrison was elected in 1840, the Whigs, who also held a majority in Congress, repealed the Independent Treasury, intending to charter a new national bank. However, Harrison died after only a month in office, and his successor, John Tyler, vetoed two bills to reestablish the Bank.[332] The nation returned to deposit banking.[333] The Independent Treasury was recreated under the Polk presidency in 1846.[332] The United States would never have another national banking system again until the Federal Reserve was established in 1913.[334]

The Bank War has proven to be a controversial subject in the scholarly community long after it took place.[334] Quite a few historians over the years have proven to be either extremely celebratory or extremely critical of Jackson's war on the Bank. However, many agree that some sort of compromise to recharter the Bank with reforms to restrict its influence would have been ideal.[335][336][337]

1930s Jackson biographer Marquis James commemorates Jackson's war against the Bank as the triumph of ordinary men against greedy and corrupt businessmen. Arthur M. Schlesinger Jr., who wrote The Age of Jackson (1945), adopts a similar theme, celebrating Jacksonian democracy and representing it as the triumph of Eastern workers. Schlesinger portrays Jackson's economic program as a progressive precursor to the New Deal under Franklin D. Roosevelt.[334] Robert V. Remini believes that the Bank had "too much power, which it was obviously using in politics. It had too much money which it was using to corrupt individuals. And so Jackson felt he had to get rid of it. It is a pity because we do need a national bank, but it requires control." He refutes the idea that the collapse of the Bank was responsible for the Panic of 1837, which he describes as "a world-wide economic collapse", but concedes that it "may have exacerbated" the crisis.[335]

Richard Hofstadter accepts that the Bank had too much power to interfere in politics but excoriates Jackson for making war on it. "By destroying Biddle's Bank Jackson had taken away the only effective restraint on the wildcatters ... he had strangled a potential threat to democratic government, but at an unnecessarily high cost. He had caused Biddle to create one depression and the pet banks to aggravate a second, and he had left the nation committed to a currency and credit system even more inadequate than the one he had inherited." Hofstadter criticizes Schlesinger's contention that Jackson's program was a forerunner to the New Deal, arguing that the two were distinct because Jackson wanted less government involvement in finance and infrastructure, while Roosevelt wanted more.[336] Hammond, in his Banks and Politics in America from the Revolution to the Civil War, renews the criticism of Schlesinger. He praises the Bank and Biddle's conduct, claiming that Jackson's war on it created a periodic of economic instability that would not be remedied until the creation of the Federal Reserve in 1913. Historian Jon Meacham, in his 2008 biography of Jackson, concludes that the destruction of the Bank went against the country's interests.[334]

Daniel Walker Howe criticizes Jackson's hard money policies and claims that his war on the Bank "brought little if any benefit" to the common men who made up the majority of his supporters. In the end, he believes, the government was deprived of the stabilizing influence of a national bank and instead ended up with inflationary paper currency. "It was America's failure that the future of the national bank could have been resolved through compromise and a larger measure of government supervision", Howe writes. "Jackson and Biddle were both too headstrong for the country's good. The great Bank War turned out to be a conflict both sides lost."[337]




-----

Bank of England

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Governor and Company of the Bank of England
Seal of the Bank of England
Seal of the Bank of England
HeadquartersThreadneedle StreetLondon, England, United Kingdom
Coordinates51.5142°N 0.0885°WCoordinates51.5142°N 0.0885°W
Established27 July 1694; 326 years ago
OwnershipOwned by HM Government through the Government Legal Department[1][2]
GovernorAndrew Bailey (since 2020)
Central bank ofUnited Kingdom
CurrencyPound sterling
GBP (ISO 4217)
Reserves101 590 million USD[2]
Bank rate0.1%[3]
Websitewww.bankofengland.co.uk

The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694 to act as the English Government's banker, and still one of the bankers for the Government of the United Kingdom, it is the world's eighth-oldest bank. It was privately owned by stockholders from its foundation in 1694 until it was nationalised in 1946 by the Attlee ministry.[4][5]

In 2009, a request made to HM Treasury under the Freedom of Information Act sought details about the 3% Bank of England stock owned by unnamed shareholders whose identity the Bank is not at liberty to disclose.[6] In a letter of reply dated 15 October 2009, HM Treasury explained that. 'Some of the 3% Treasury stock which was used to compensate former owners of Bank stock has not been redeemed. However, interest is paid out twice a year and it is not the case that this has been accumulating and compounding.' [7]

The Bank became an independent public organisation in 1998, wholly owned by the Treasury Solicitor on behalf of the government,[1] but with independence in setting monetary policy.[8][9][10][11]

The Bank is one of eight banks authorised to issue banknotes in the United Kingdom, has a monopoly on the issue of banknotes in England and Wales and regulates the issue of banknotes by commercial banks in Scotland and Northern Ireland.[12]

The Bank's Monetary Policy Committee has a devolved responsibility for managing monetary policy. The Treasury has reserve powers to give orders to the committee "if they are required in the public interest and by extreme economic circumstances", but such orders must be endorsed by Parliament within 28 days.[13] The Bank's Financial Policy Committee held its first meeting in June 2011 as a macroprudential regulator to oversee regulation of the UK's financial sector.

The Bank's headquarters have been in London's main financial district, the City of London, on Threadneedle Street, since 1734. It is sometimes known as The Old Lady of Threadneedle Street, a name taken from a satirical cartoon by James Gillray in 1797.[14] The road junction outside is known as Bank junction.

As a regulator and central bank, the Bank of England has not offered consumer banking services for many years, but it still does manage some public-facing services such as exchanging superseded bank notes.[15] Until 2016, the bank provided personal banking services as a privilege for employees.[16]

History

Founding

Sealing of the Bank of England Charter (1694), by Lady Jane Lindsay, 1905

England's crushing defeat by France, the dominant naval power, in naval engagements culminating in the 1690 Battle of Beachy Head, became the catalyst for England to rebuild itself as a global power. William III's government wanted to build a naval fleet that would rival that of France; however, the ability to construct this fleet was hampered both by a lack of available public funds and the low credit of the English government in London. This lack of credit made it impossible for the English government to borrow the £1,200,000 (at 8% per annum) that it wanted for the construction of the fleet.[17]

To induce subscription to the loan, the subscribers were to be incorporated by the name of the Governor and Company of the Bank of England. The Bank was given exclusive possession of the government's balances, and was the only limited-liability corporation allowed to issue bank notes.[18] The lenders would give the government cash (bullion) and issue notes against the government bonds, which can be lent again. The £1.2 million was raised in 12 days; half of this was used to rebuild the navy.

As a side effect, the huge industrial effort needed, including establishing ironworks to make more nails and advances[clarification needed] in agriculture feeding the quadrupled strength of the navy, started to transform the economy. This helped the new Kingdom of Great Britain – England and Scotland were formally united in 1707 – to become powerful. The power of the navy made Britain the dominant world power in the late 18th and early 19th centuries.[19]

The establishment of the bank was devised[clarification needed] by Charles Montagu, 1st Earl of Halifax, in 1694. The plan of 1691, which had been proposed by William Paterson three years before, had not then been acted upon.[20] 58 years earlier, in 1636, Financier to the king, Philip Burlamachi, had proposed exactly the same idea in a letter addressed to Sir Francis Windebank.[21] He proposed a loan of £1.2 million to the government; in return the subscribers would be incorporated as The Governor and Company of the Bank of England with long-term banking privileges including the issue of notes. The royal charter was granted on 27 July through the passage of the Tonnage Act 1694.[22] Public finances were in such dire condition at the time[23] that the terms of the loan were that it was to be serviced at a rate of 8% per annum, and there was also a service charge of £4,000 per annum for the management of the loan. The first governor was Sir John Houblon, who is depicted in the £50 note issued in 1994. The charter was renewed in 1742, 1764, and 1781.

18th century

Satirical cartoon protesting against the introduction of paper money, by James Gillray, 1797. The "Old Lady of Threadneedle St" (the Bank personified) is ravished by William Pitt the Younger.

The Bank's original home was in Walbrook, a street in the City of London, where during reconstruction in 1954 archaeologists found the remains of a Roman temple of Mithras (Mithras is – rather fittingly – said to have been worshipped as, amongst other things, the God of Contracts);[24] the Mithraeum ruins are perhaps the most famous of all 20th-century Roman discoveries in the City of London and can be viewed by the public.[citation needed]

The Bank moved to its current location in Threadneedle Street in 1734,[25] and thereafter slowly acquired neighbouring land to create the site necessary for erecting the Bank's original home at this location, under the direction of its chief architect Sir John Soane, between 1790 and 1827. (Sir Herbert Baker's rebuilding of the Bank in the first half of the 20th century, demolishing most of Soane's masterpiece, was described by architectural historian Nikolaus Pevsner as "the greatest architectural crime, in the City of London, of the twentieth century".)[citation needed]

When the idea and reality of the national debt came about during the 18th century, this was also managed by the Bank. During the American war of independence, business for the Bank was so good that George Washington remained a shareholder throughout the period.[26] By the charter renewal in 1781 it was also the bankers' bank – keeping enough gold to pay its notes on demand until 26 February 1797, when war had so diminished gold reserves that – following an invasion scare caused by the Battle of Fishguard days earlier – the government prohibited the Bank from paying out in gold by the passing of the Bank Restriction Act 1797. This prohibition lasted until 1821.[citation needed]

19th century

Bank of England, from Microcosm of London, c. 1808
Bank Stock of the Bank of England, issued 25. January 1876

In 1825–26, the bank was able to avert a liquidity crisis when Nathan Mayer Rothschild succeeded in supplying it with gold.[27]

The 1844 Bank Charter Act tied the issue of notes to the gold reserves and gave the Bank sole rights with regard to the issue of banknotes. Private banks that had previously had that right retained it, provided that their headquarters were outside London and that they deposited security against the notes that they issued. A few English banks continued to issue their own notes until the last of them was taken over in the 1930s. Scottish and Northern Irish private banks still have that right.

The bank acted as lender of last resort for the first time in the panic of 1866.[28]

The last private bank in England to issue its own notes was Thomas Fox's Fox, Fowler and Company bank in Wellington, which rapidly expanded, until it merged with Lloyds Bank in 1927. They were legal tender until 1964. There are nine notes left in circulation; one is housed at Tone Dale HouseWellington.

20th century

Britain was on the gold standard until 1931, when the Bank of England unilaterally and abruptly took Britain off the gold standard.[29]

During the governorship of Montagu Norman, from 1920 to 1944, the Bank made deliberate efforts to move away from commercial banking and become a central bank. In 1946, shortly after the end of Norman's tenure, the bank was nationalised by the Labour government.

The Bank pursued the multiple goals of Keynesian economics after 1945, especially "easy money" and low interest rates to support aggregate demand. It tried to keep a fixed exchange rate, and attempted to deal with inflation and sterling weakness by credit and exchange controls.[30]

In 1977, the Bank set up a wholly owned subsidiary called Bank of England Nominees Limited (BOEN), a now defunct private limited company, with two of its hundred £1 shares issued. According to its Memorandum & Articles of Association, its objectives were: "To act as Nominee or agent or attorney either solely or jointly with others, for any person or persons, partnership, company, corporation, government, state, organisation, sovereign, province, authority, or public body, or any group or association of them...." Bank of England Nominees Limited was granted an exemption by Edmund Dell, Secretary of State for Trade, from the disclosure requirements under Section 27(9) of the Companies Act 1976, because "it was considered undesirable that the disclosure requirements should apply to certain categories of shareholders." The Bank of England is also protected by its royal charter status, and the Official Secrets Act.[31] BOEN was a vehicle for governments and heads of state to invest in UK companies (subject to approval from the Secretary of State), providing they undertake "not to influence the affairs of the company".[32][33] In its later years, BOEN was no longer exempt from company law disclosure requirements.[34] Although a dormant company,[35] dormancy does not preclude a company actively operating as a nominee shareholder.[36] BOEN had two shareholders: the Bank of England, and the Secretary of the Bank of England.[37]

The reserve requirement for banks to hold a minimum fixed proportion of their deposits as reserves at the Bank of England was abolished in 1981: see reserve requirement for more details. The contemporary transition from Keynesian economics to Chicago economics was analysed by Nicholas Kaldor in The Scourge of Monetarism.[38]

On 6 May 1997, following the 1997 general election that brought a Labour government to power for the first time since 1979, it was announced by the Chancellor of the Exchequer, Gordon Brown, that the Bank would be granted operational independence over monetary policy.[39] Under the terms of the Bank of England Act 1998 (which came into force on 1 June 1998), the Bank's Monetary Policy Committee was given sole responsibility for setting interest rates to meet the Government's Retail Prices Index (RPI) inflation target of 2.5%.[40] The target has changed to 2% since the Consumer Price Index (CPI) replaced the Retail Prices Index as the Treasury's inflation index.[41] If inflation overshoots or undershoots the target by more than 1%, the Governor has to write a letter to the Chancellor of the Exchequer explaining why, and how he will remedy the situation.[42]

The success of inflation targeting in the United Kingdom has been attributed to the Bank's focus on transparency.[43] The Bank of England has been a leader in producing innovative ways of communicating information to the public, especially through its Inflation Report, which has been emulated by many other central banks.[44]

Independent central banks that adopt an inflation target are known as Friedmanite central banks. This change in Labour's politics was described by Skidelsky in The Return of the Master[45] as a mistake and as an adoption of the Rational Expectations Hypothesis as promulgated by Walters.[46] Inflation targets combined with central bank independence have been characterised as a "starve the beast" strategy creating a lack of money in the public sector.

The handing over of monetary policy to the Bank had been a key plank of the Liberal Democrats' economic policy since the 1992 general election.[47] Conservative MP Nicholas Budgen had also proposed this as a private member's bill in 1996, but the bill failed as it had the support of neither the government nor the opposition.

21st century

Mark Carney assumed the post of Governor of the Bank of England on 1 July 2013. He succeeded Mervyn King, who took over on 30 June 2003. Carney, a Canadian, was to serve an initial five-year term rather than the typical eight. He became the first Governor not to be a UK citizen, but has since been granted citizenship.[48] At Government request, his term was extended to 2019, then again to 2020.[49] As of January 2014, the Bank also has four Deputy Governors.

BOEN was dissolved, following liquidation, in July 2017.[50]

Functions

Two main areas are tackled by the Bank to ensure it carries out these functions efficiently:[51]

Monetary stability

Note: It is important to note that "monetary" and "financial" are synonyms.[citation needed]

Stable prices and confidence in the currency are the two main criteria for monetary stability. Stable prices are maintained by seeking to ensure that price increases meet the Government's inflation target. The Bank aims to meet this target by adjusting the base interest rate, which is decided by the Monetary Policy Committee, and through its communications strategy, such as publishing yield curves.[52]

Maintaining financial stability involves protecting against threats to the whole financial system. Threats are detected by the Bank's surveillance and market intelligence functions. The threats are then dealt with through financial and other operations, both at home and abroad. In exceptional circumstances, the Bank may act as the lender of last resort by extending credit when no other institution will.

The Bank works together with other institutions to secure both monetary and financial stability, including:

  • HM Treasury, the Government department responsible for financial and economic policy; and
  • Other central banks and international organisations, with the aim of improving the international financial system.

The 1997 memorandum of understanding describes the terms under which the Bank, the Treasury and the FSA work toward the common aim of increased financial stability.[53] In 2010, the incoming Chancellor announced his intention to merge the FSA back into the Bank. As of 2012, the current director for financial stability is Andy Haldane.[54]

The Bank acts as the government's banker, and it maintains the government's Consolidated Fund account. It also manages the country's foreign exchange and gold reserves. The Bank also acts as the bankers' bank, especially in its capacity as a lender of last resort.

The Bank has a monopoly on the issue of banknotes in England and Wales. Scottish and Northern Irish banks retain the right to issue their own banknotes, but they must be backed one-for-one with deposits at the Bank, excepting a few million pounds representing the value of notes they had in circulation in 1845. The Bank decided to sell its banknote-printing operations to De La Rue in December 2002, under the advice of Close Brothers Corporate Finance Ltd.[55]

Since 1998, the Monetary Policy Committee (MPC) has had the responsibility for setting the official interest rate. However, with the decision to grant the Bank operational independence, responsibility for government debt management was transferred in 1998 to the new Debt Management Office, which also took over government cash management in 2000. Computershare took over as the registrar for UK Government bonds (gilt-edged securities or gilts) from the Bank at the end of 2004.

The Bank used to be responsible for the regulation and supervision of the banking and insurance industries. This responsibility was transferred to the Financial Services Authority in June 1998, but after the financial crises in 2008 new banking legislation transferred the responsibility for regulation and supervision of the banking and insurance industries back to the Bank.

In 2011, the interim Financial Policy Committee (FPC) was created as a mirror committee to the MPC to spearhead the Bank's new mandate on financial stability. The FPC is responsible for macro prudential regulation of all UK banks and insurance companies.

To help maintain economic stability, the Bank attempts to broaden understanding of its role, both through regular speeches and publications by senior Bank figures, a semiannual Financial Stability Report,[56] and through a wider education strategy aimed at the general public. It currently maintains a free museum and ran the Target Two Point Zero competition for A-level students, closing in 2017.[57]

Asset purchase facility

The Bank has operated, since January 2009, an Asset Purchase Facility (APF) to buy "high-quality assets financed by the issue of Treasury bills and the DMO's cash management operations" and thereby improve liquidity in the credit markets.[58] It has, since March 2009, also provided the mechanism by which the Bank's policy of quantitative easing (QE) is achieved, under the auspices of the MPC. Along with the managing the £200 billion of QE funds, the APF continues to operate its corporate facilities. Both are undertaken by a subsidiary company of the Bank of England, the Bank of England Asset Purchase Facility Fund Limited (BEAPFF).[58]

Banknote issues

The Bank has issued banknotes since 1694. Notes were originally hand-written; although they were partially printed from 1725 onwards, cashiers still had to sign each note and make them payable to someone. Notes were fully printed from 1855. Until 1928 all notes were "White Notes", printed in black and with a blank reverse. In the 18th and 19th centuries White Notes were issued in £1 and £2 denominations. During the 20th century White Notes were issued in denominations between £5 and £1000.

Until the mid-19th century, commercial banks were allowed to issue their own banknotes, and notes issued by provincial banking companies were commonly in circulation.[59] The Bank Charter Act 1844 began the process of restricting note issue to the Bank; new banks were prohibited from issuing their own banknotes and existing note-issuing banks were not permitted to expand their issue. As provincial banking companies merged to form larger banks, they lost their right to issue notes, and the English private banknote eventually disappeared, leaving the Bank with a monopoly of note issue in England and Wales. The last private bank to issue its own banknotes in England and Wales was Fox, Fowler and Company in 1921.[60][61] However, the limitations of the 1844 Act only affected banks in England and Wales, and today three commercial banks in Scotland and four in Northern Ireland continue to issue their own banknotes, regulated by the Bank.[12]

At the start of the First World War, the Currency and Bank Notes Act 1914 was passed, which granted temporary powers to HM Treasury for issuing banknotes to the values of £1 and 10/- (ten shillings). Treasury notes had full legal tender status and were not convertible into gold through the Bank; they replaced the gold coin in circulation to prevent a run on sterling and to enable raw material purchases for armament production. These notes featured an image of King George V (Bank of England notes did not begin to display an image of the monarch until 1960). The wording on each note was:

UNITED KINGDOM OF GREAT BRITAIN AND IRELAND – Currency notes are Legal Tender for the payment of any amount – Issued by the Lords Commissioners of His Majesty's Treasury under the Authority of Act of Parliament (4 & 5 Geo. V c.14).

Treasury notes were issued until 1928, when the Currency and Bank Notes Act 1928 returned note-issuing powers to the banks.[62] The Bank of England issued notes for ten shillings and one pound for the first time on 22 November 1928.

During the Second World War the German Operation Bernhard attempted to counterfeit denominations between £5 and £50, producing 500,000 notes each month in 1943. The original plan was to parachute the money into the UK in an attempt to destabilise the British economy, but it was found more useful to use the notes to pay German agents operating throughout Europe. Although most fell into Allied hands at the end of the war, forgeries frequently appeared for years afterwards, which led banknote denominations above £5 to be removed from circulation.

In 2006, over £53 million in banknotes belonging to the Bank was stolen from a depot in Tonbridge, Kent.[63]

Modern banknotes are printed by contract with De La Rue Currency in Loughton, Essex.[64]

Gold vault

The bank is custodian to the official gold reserves of the United Kingdom and around 30 other countries.[65] As of April 2016, the bank held around 400,000 bars, which is equivalent to 5,134 tonnes (5,659 tons) of gold. These gold deposits were estimated in August 2018 to have a current market value of approximately £200 billion.[66] These estimates suggest the vault could hold as much as 3% of the gold mined throughout human history.[67]

Governance of the Bank of England

Governors

Following is a list of the governors of the Bank of England since the beginning of the 20th century:[68]

NamePeriod
Samuel Gladstone1899–1901
Augustus Prevost1901–1903
Samuel Morley1903–1905
Alexander Wallace1905–1907
William Campbell1907–1909
Reginald Eden Johnston1909–1911
Alfred Cole1911–1913
Walter Cunliffe1913–1918
Brien Cokayne1918–1920
Montagu Norman1920–1944
Thomas Catto1944–1949
Cameron Cobbold1949–1961
Rowland Baring (3rd Earl of Cromer)1961–1966
Leslie O'Brien1966–1973
Gordon Richardson1973–1983
Robert Leigh-Pemberton1983–1993
Edward George1993–2003
Mervyn King2003–2013
Mark Carney2013–2020
Andrew Bailey2020–present

Court of Directors

The Court of Directors is a unitary board that is responsible for setting the organisation's strategy and budget and taking key decisions on resourcing and appointments. It consists of five executive members from the Bank plus up to 9 non-executive members, all of whom are appointed by the Crown. The Chancellor selects the Chairman of the Court from among the non-executive members. The Court is required to meet at least 7 times a year.[69]

The Governor serves for a period of eight years, the Deputy Governors for five years, and the non-executive members for up to four years.

Court of Directors (2019)[70]
NameFunction
Bradley FriedChairman of Court. Managing Partner of Grovepoint Capital LLP
Mark CarneyGovernor
Benjamin BroadbentDeputy Governor, Monetary Policy
Sir Jon CunliffeDeputy Governor, Financial Stability
Sam WoodsDeputy Governor, Prudential Regulation & Chief Executive of the Prudential Regulation Authority
Sir David RamsdenDeputy Governor, Markets and Banking
Anne GloverChief Executive and Co-Founder of Amadeus Capital Partners
Diana NobleNon-Executive Director
Diana 'Dido' HardingMember of the House of Lords
Dave PrentisGeneral Secretary of UNISON
Don RobertChairman, Experian plc
Dorothy ThompsonChair of Tullow Oil plc,
Ron KalifaBoard Director of Worldpay and Chairman of Network International
Frances O'GradyGeneral Secretary of the British Trades Union Congress
Hanneke SmitsCEO of Newton Investment Management

Other staff

Since 2013, the Bank has had a chief operating officer (COO).[71] As of 2017, the Bank's COO has been Joanna Place.[72]

As of 2014, the Bank's chief economist is Andrew Haldane.[73]

See also

References

  1. Jump up to:a b "Freedom of Information – disclosures". Bank of England. Retrieved 29 September 2013.
  2. Jump up to:a b https://d-nb.info/1138787981/34
  3. ^ Bank of England"Monetary policy summary for the special monetary policy committee meeting on 19 March 2020". Retrieved 19 March 2020.
  4. ^ "House of Commons Debate 29th October 1945, Second Reading of the Bank of England Bill". Hansard.millbanksystems.com. Retrieved 12 October 2012.
  5. ^ "Bank of England Act 1946". Retrieved 19 November 2019.
  6. ^ Keogh, Joseph (17 September 2009). "Named and unnamed shareholders of the Bank of England"What do they know.
  7. ^ Morran, Paul (15 October 2009). "Re: Freedom of Information Act 2000: Bank of England Unnamed 3% Stock Holding Not Redeemed" (PDF)What do they know.
  8. ^ 1 June 1998, The Bank of England Act 1998 (Commencement) Order 1998 s 2
  9. ^ "BBC On This Day - 6-1997: Brown sets Bank of England free". 6 May 1997. Retrieved 14 September 2014.
  10. ^ "Bank of England - About the Bank". Archived from the original on 31 December 2014. Retrieved 14 September 2014.
  11. ^ "Bank of England: Relationship with Parliament". Archived from the original on 8 July 2009. Retrieved 14 September 2014.
  12. Jump up to:a b "The Bank of England's Role in Regulating the Issue of Scottish and Northern Ireland Banknotes"Bank of England website. Retrieved 18 November 2019.
  13. ^ "Act of Parliament gives devolved responsibility to the MPC with reserve powers for the Treasury". Opsi.gov.uk. Retrieved 10 May 2010.
  14. ^ Bank of England, "Who is The Old Lady of Threadneedle Street? Archived 15 January 2018 at the Wayback Machine". Accessed 15 January 2018.
  15. ^ "Exchanging old banknotes". Bank of England. Retrieved 19 October 2019.
  16. ^ Topham, Gwyn. "Bank of England to close personal banking service for employees"The Guardian. Retrieved 8 November2016.
  17. ^ Nichols, Glenn O. (1971). "English Government Borrowing, 1660-1688". Journal of British Studies10 (2): 83–104. doi:10.1086/385611ISSN 0021-9371JSTOR 175350.
  18. ^ Bagehot, Walter (1873). Lombard Street : a description of the money market. London: Henry S. King and Co.
  19. ^ "BBC: Empire of the Seas programme". webcache.googleusercontent.com. Archived from the originalon 20 December 2019. Retrieved 10 May 2010.
  20. ^ Committee of Finance and Industry 1931 (Macmillan Report) description of the founding of Bank of England. 1 January 1979. ISBN 9780405112126. Retrieved 10 May 2010. "Its foundation in 1694 arose out the difficulties of the Government of the day in securing subscriptions to State loans. Its primary purpose was to raise and lend money to the State and in consideration of this service it received under its Charter and various Act of Parliament, certain privileges of issuing bank notes. The corporation commenced, with an assured life of twelve years after which the Government had the right to annul its Charter on giving one year's notice. '''Subsequent extensions of this period coincided generally with the grant of additional loans to the State'''"
  21. ^ Calendar Of State Papers Domestic Series p. 73 1636-1637
  22. ^ H. Roseveare, /The Financial Revolution 1660–1760/ (1991, Longman), pp. 34
  23. ^ III, Kenneth E. Hendrickson (25 November 2014). The Encyclopedia of the Industrial Revolution in World HistoryRowman & LittlefieldISBN 9780810888883.
  24. ^ "MITHRA i. MITRA IN OLD INDIAN – Encyclopaedia Iranica"www.iranicaonline.org. Retrieved 20 September 2016.
  25. ^ "Bank of England: Buildings and Architects". The Bank of England. Archived from the original on 10 September 2015. Retrieved 31 July 2015.
  26. ^ "The many, often competing, jobs of the Bank of England"The Economist. 16 September 2017.
  27. ^ Wilson, Harry (4 February 2011). "Rothschild: history of a London banking dynasty"The Telegraph.
  28. ^ "From lender of last resort to global currency? Sterling lessons for the US dollar". VOX. 23 July 2011. Retrieved 8 May 2014.
  29. ^ Morrison, James Ashley (2016). "Shocking Intellectual Austerity: The Role of Ideas in the Demise of the Gold Standard in Britain" (PDF)International Organization70 (1): 175–207. doi:10.1017/S0020818315000314ISSN 0020-8183.
  30. ^ John Fforde, The Role of the Bank of England, 1941–1958(1992)
  31. ^ "27 July 1694: the Bank of England is created by Royal Charter"MoneyWeek. 27 July 2015. Retrieved 2 January 2018.
  32. ^ "Proceedings of the House of Commons, 21st April 1977".
  33. ^ "Guardian article on Queen's private wealth, 30th May 2002"The Guardian. London. 30 May 2002.
  34. ^ "Proceedings of the House of Lords, 26th April 2011".
  35. ^ "Bank of England Nominees Company Accounts".
  36. ^ "Example of a Dormant Nominee Company". Archived from the original on 25 April 2012. Retrieved 12 September 2011.
  37. ^ "Freedom of Information Act response regarding Bank of England Nominees Limited" (PDF). Archived from the original (PDF) on 28 August 2016. Retrieved 31 May 2011.
  38. ^ The Scourge of Monetarism. Oxford University Press. 1 January 1982. ISBN 9780198771876. Retrieved 19 August 2016.
  39. ^ Sattler, Thomas; Brandt, Patrick T.; Freeman, John R. (April 2010). "Democratic accountability in open economies". Quarterly Journal of Political Science5 (1): 71–97. CiteSeerX 10.1.1.503.6174doi:10.1561/100.00009031.
  40. ^ "Key Monetary Policy Dates Since 1990". Bank of England. Archived from the original on 29 June 2007. Retrieved 20 September 2007.
  41. ^ "Remit of the Monetary Policy Committee of the Bank of England and the New Inflation Target" (PDF). HM Treasury. 10 December 2003. Archived (PDF) from the original on 26 September 2007. Retrieved 20 September 2007.
  42. ^ "Monetary Policy Framework". Bank of England. Retrieved 31 October 2016.
  43. ^ "Targeting Inflation: The United Kingdom in Retrospect"(PDF). IMF. Retrieved 31 October 2016.
  44. ^ "Inflation Targeting Has Been A Successful Monetary Policy Strategy"National Bureau of Economic Research. Retrieved 31 October 2016.
  45. ^ The Return of the Master. Public Affairs. 2009. ISBN 978-1610390033. Retrieved 19 August 2016.
  46. ^ Walters, A.A. (June 1971). "Consistent expectations, distributed lags and the quantity theory". The Economic Journal81 (322): 273–281. doi:10.2307/2230071JSTOR 2230071.
  47. ^ Liberal Democrat election manifesto, 1992
  48. ^ "Mark Carney named new Bank of England governor"BBC News. 26 November 2012. Retrieved 26 November 2012.
  49. ^ "Carney to stay at Bank of England until 2020"BBC News. 11 September 2018.
  50. ^ "BANK OF ENGLAND NOMINEES LIMITED - Filing history (free information from Companies House)".
  51. ^ "The Bank's core purposes" (PDF)Annual Report 2011. Bank of England. Retrieved 24 October 2011.
  52. ^ Bank of England – Yield Curves by Internet Archive.[1]
  53. ^ "Memorandum of Understanding between the HM Treasury, the Bank of England and the Financial Services Authority" (PDF). Archived from the original (PDF) on 3 December 2010. Retrieved 10 May 2010.
  54. ^ Hannah Kuchler and Claire Jones (30 October 2012). "BoE's Haldane says Occupy was right"Financial Times. Retrieved 30 October 2012.(registration required)
  55. ^ "Sale of Bank Note Printing". Bank of England. Retrieved 10 June 2006.
  56. ^ [2] Archived 11 February 2012 at the Wayback Machine
  57. ^ "Bank of England: Education". Bank of England. Archivedfrom the original on 29 March 2007. Retrieved 28 March 2007.
  58. Jump up to:a b "Asset Purchase Facility". Bank of England. Archivedfrom the original on 26 July 2010. Retrieved 12 August 2010.
  59. ^ "£2 note issued by Evans, Jones, Davies & Co". British Museum. Archived from the original on 18 January 2012. Retrieved 31 October 2011.
  60. ^ "A brief history of banknotes"Bank of England website. Retrieved 31 October 2011.
  61. ^ "Fox, Fowler & Co. £5 note". British Museum. Archived from the original on 2 October 2011. Retrieved 31 October 2011.
  62. ^ Trevor R Howard. "Treasury notes". Archived from the original on 5 December 2007. Retrieved 12 October 2007.
  63. ^ "Record £53m stolen in depot raid". 27 February 2006. Retrieved 14 September 2014.
  64. ^ "Banknote Production"bankofengland.co.uk. Bank of England. Archived from the original on 10 March 2012.
  65. ^ Belton, Pádraig. "The city with $248 billion beneath its pavement"www.bbc.com. Retrieved 9 November 2020.
  66. ^ "Value of all forms of gold".
  67. ^ 5,134 tonnes / 171,300 tonnes = 2.997%
  68. ^ "Governors of the Bank of England: A chronological list (1694 – present)" (PDF). Bank of England. Retrieved 17 July 2014.
  69. ^ "Court of Directors". Bank of England. Retrieved 8 January2018.
  70. ^ "Court of Directors"www.bankofengland.co.uk. Retrieved 11 June 2019.
  71. ^ "News Release - Appointment of Chief Operating Officer"Bank of England. 18 June 2013. Retrieved 3 September 2015.
  72. ^ "Joanna Place - Chief Operating Officer"Bank of England. Retrieved 6 March 2020.
  73. ^ "Bank of England Keeps Rates Steady"ABC News. Associated Press. 22 October 2014. Archived from the originalon 27 October 2014. Retrieved 26 October 2014.

Further reading

External links



-----

Andrew Jackson

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Andrew Jackson
A portrait of Andrew Jackson, serious in posture and expression, with a grey-and-white haired widow's peak, wearing a red-collared black cape.
Portrait by Ralph Eleaser Whiteside Earlc. 1835
7th President of the United States
In office
March 4, 1829 – March 4, 1837
Vice President
Preceded byJohn Quincy Adams
Succeeded byMartin Van Buren
United States Senator
from Tennessee
In office
March 4, 1823 – October 14, 1825
Preceded byJohn Williams
Succeeded byHugh Lawson White
In office
September 26, 1797 – April 1, 1798
Preceded byWilliam Cocke
Succeeded byDaniel Smith
1st Territorial Governor of Florida
In office
March 10, 1821 – December 31, 1821
Appointed byJames Monroe
Preceded by
Succeeded byWilliam Pope Duval
Justice of the Tennessee Supreme Court
In office
June 1798 – June 1804
Preceded byHowell Tatum
Succeeded byJohn Overton
Member of the U.S. House of Representatives
from Tennessee's at-large district
In office
December 4, 1796 – September 26, 1797
Preceded byConstituency established
Succeeded byWilliam C. C. Claiborne
Personal details
BornMarch 15, 1767
Waxhaw Settlement between North Carolina and South CarolinaBritish America
DiedJune 8, 1845 (aged 78)
Nashville, Tennessee, U.S.
Cause of deathDropsy and heart failure
Resting placeThe Hermitage
Political party
Spouse(s)
(m. 1794; died 1828)
Children3 adopted sons
Awards
SignatureCursive signature in ink
Military service
Allegiance United States
Branch/serviceUnited States Army
Rank
Battles/wars

Andrew Jackson (March 15, 1767 – June 8, 1845) was an American lawyer, soldier, and statesman who served as the seventh president of the United States from 1829 to 1837. Before being elected to the presidency, Jackson gained fame as a general in the United States Army and served in both houses of the U.S. Congress. An expansionist president, Jackson sought to advance the rights of the "common man"[1] against a "corrupt aristocracy"[2] and to preserve the Union.

Born in the colonial Carolinas in the decade before the American Revolutionary War, Jackson became a frontier lawyer and married Rachel Donelson Robards. He served briefly in the United States House of Representatives and the United States Senate, representing Tennessee. After resigning, he served as a justice on the Tennessee Supreme Court from 1798 until 1804. Jackson purchased a property later known as The Hermitage, and became a wealthy, slaveowning planter. In 1801, he was appointed colonel of the Tennessee militia and was elected its commander the following year. He led troops during the Creek War of 1813–1814, winning the Battle of Horseshoe Bend. The subsequent Treaty of Fort Jackson required the Creek surrender of vast lands in present-day Alabama and Georgia. In the concurrent war against the British, Jackson's victory in 1815 at the Battle of New Orleans made him a national hero. Jackson then led U.S. forces in the First Seminole War, which led to the annexation of Florida from Spain. Jackson briefly served as Florida's first territorial governor before returning to the Senate. He ran for president in 1824, winning a plurality of the popular and electoral vote. As no candidate won an electoral majority, the House of Representatives elected John Quincy Adams in a contingent election. In reaction to the alleged "corrupt bargain" between Adams and Henry Clay and the ambitious agenda of President Adams, Jackson's supporters founded the Democratic Party.

Jackson ran again in 1828, defeating Adams in a landslide. Jackson faced the threat of secession by South Carolina over what opponents called the "Tariff of Abominations". The crisis was defused when the tariff was amended, and Jackson threatened the use of military force if South Carolina attempted to secede. In Congress, Henry Clay led the effort to reauthorize the Second Bank of the United States. Jackson, regarding the Bank as a corrupt institution that benefited the wealthy at the expense of ordinary Americans, vetoed the renewal of its charter. After a lengthy struggle, Jackson and his allies thoroughly dismantled the Bank. In 1835, Jackson became the only president to completely pay off the national debt, fulfilling a longtime goal. While Jackson pursued numerous reforms designed to eliminate waste and corruption, his presidency marked the beginning of the ascendancy of the party "spoils system" in American politics. In 1830, Jackson signed the Indian Removal Act, which forcibly removed most members of the major tribes of the Southeast to Indian Territory; these removals were subsequently known as the Trail of Tears. The relocation process dispossessed these nations of their land and resulted in widespread death and disease. Jackson opposed the abolitionist movement, which grew stronger in his second term. In foreign affairs, Jackson's administration concluded a "most favored nation" treaty with the United Kingdom, settled claims of damages against France from the Napoleonic Wars, and recognized the Republic of Texas. In January 1835, he survived the first assassination attempt on a sitting president.

In his retirement, Jackson remained active in Democratic Party politics, supporting the presidencies of Martin Van Buren and James K. Polk. Though fearful of its effects on the slavery debate, Jackson advocated the annexation of Texas, which was accomplished shortly before his death. Jackson has been widely revered in the United States as an advocate for democracy and the common man. Many of his actions proved divisive, garnering both fervent support and strong opposition from many in the country. His reputation has suffered since the 1970s, largely due to his pivotal role in the forcible removal of Native Americans from their ancestral homelands; however, surveys of historians and scholars have ranked Jackson favorably among U.S. presidents.

Early life and education

Andrew Jackson was born on March 15, 1767, in the Waxhaws region of the Carolinas. His parents were Scots-Irish colonists Andrew Jackson and his wife Elizabeth Hutchinson, Presbyterians who had emigrated from UlsterIreland, two years earlier.[3][4] Jackson's father was born in CarrickfergusCounty Antrim, around 1738.[5] Jackson's parents lived in the village of Boneybefore, also in County Antrim. His paternal ancestors originated in Killingswold GroveYorkshire, England.[6]

When they immigrated to North America in 1765, Jackson's parents’ first two children also came with them from Ireland, Hugh (born 1763) and Robert (born 1764).[7] The family probably landed in Philadelphia. Most likely they traveled overland through the Appalachian Mountains to the Scots-Irish community in the Waxhaws, straddling the border between North and South Carolina.[8] Jackson's father died in February 1767 at the age of 29, in a logging accident while clearing land, three weeks before his son Andrew was born.[7] Jackson, his mother, and his brothers lived with Jackson's aunt and uncle in the Waxhaws region, and Jackson received schooling from two nearby priests.[9]

Jackson's exact birthplace is unclear because of a lack of knowledge of his mother's actions immediately following her husband's funeral.[10] The area was so remote that the border between North and South Carolina had not been officially surveyed.[11] In 1824, Jackson wrote a letter saying he had been born on the plantation of his uncle James Crawford in Lancaster County, South Carolina.[10] Jackson may have claimed to be a South Carolinian because the state was considering nullification of the Tariff of 1824, which he opposed. In the mid-1850s, second-hand evidence indicated that he might have been born at a different uncle's home in North Carolina.[11][12] As a young boy, Jackson was easily offended and was considered something of a bully. He was, however, also said to have taken a group of younger and weaker boys under his wing and been kind to them.[13]

Revolutionary War service

Sketch of a soldier preparing to strike a boy with a sword. The boy holds out his arm in self-defense.
Young Jackson Refusing to Clean Major Coffin's Boots (1876 lithograph)

During the Revolutionary War, Jackson's eldest brother, Hugh, died from heat exhaustion after the Battle of Stono Ferry on June 20, 1779.[14] Anti-British sentiment intensified following the Waxhaws Massacre on May 29, 1780. Jackson's mother encouraged him and his elder brother Robert to attend the local militia drills.[15] Soon, they began to help the militia as couriers.[16] They served under Colonel William Richardson Davie at the Battle of Hanging Rock on August 6.[15] Andrew and Robert were captured by the British in April 1781[17][16] while staying at the home of the Crawford family. When Andrew refused to clean the boots of a British officer, the officer slashed at the youth with a sword, leaving him with scars on his left hand and head, as well as an intense hatred for the British. Robert also refused to do as commanded and was struck with the sword.[18] The two brothers were held as prisoners, contracted smallpox, and nearly starved to death in captivity.[19]

Later that year, their mother Elizabeth secured the brothers' release. She then began to walk both boys back to their home in the Waxhaws, a distance of some 40 miles (64 km). Both were in very poor health. Robert, who was far worse, rode on the only horse they had, while Andrew walked behind them. In the final two hours of the journey, a torrential downpour began which worsened the effects of the smallpox. Within two days of arriving back home, Robert was dead and Andrew in mortal danger.[20][21] After nursing Andrew back to health, Elizabeth volunteered to nurse American prisoners of war on board two British ships in the Charleston harbor, where there had been an outbreak of cholera. In November, she died from the disease and was buried in an unmarked grave. Andrew became an orphan at age 14. He blamed the British personally for the loss of his brothers and mother.[22]

Early career

Legal career and marriage

After the Revolutionary War, Jackson received a sporadic education in a local Waxhaw school.[23] On bad terms with much of his extended family, he boarded with several different people.[24] In 1781, he worked for a time as a saddle-maker, and eventually taught school. He apparently prospered in neither profession.[25] In 1784, he left the Waxhaws region for Salisbury, North Carolina, where he studied law under attorney Spruce Macay.[26] With the help of various lawyers, he was able to learn enough to qualify for the bar. In September 1787, Jackson was admitted to the North Carolina bar.[24] Shortly thereafter, his friend John McNairy helped him get appointed to a vacant prosecutor position in the Western District of North Carolina, which would later become the state of Tennessee. During his travel west, Jackson bought his first slave, a woman who was older than him. In 1788, having been offended by fellow lawyer Waightstill Avery, Jackson fought his first duel. The duel ended with both men firing into the air, having made a secret agreement to do so before the engagement.[27][28]

Jackson moved to the small frontier town of Nashville in 1788, where he lived as a boarder with Rachel Stockly Donelson, the widow of John Donelson. Here Jackson became acquainted with their daughter, Rachel Donelson Robards. The younger Rachel was in an unhappy marriage with Captain Lewis Robards; he was subject to fits of jealous rage.[29] The two were separated in 1790. According to Jackson, he married Rachel after hearing that Robards had obtained a divorce. Her divorce had not been made final, making Rachel's marriage to Jackson bigamous and therefore invalid. After the divorce was officially completed, Rachel and Jackson remarried in 1794.[30] To complicate matters further, evidence shows that Rachel had been living with Jackson and referred to herself as Mrs. Jackson before the petition for divorce was ever made.[31] It was not uncommon on the frontier for relationships to be formed and dissolved unofficially, as long as they were recognized by the community.[32]

Land speculation and early public career

In 1794, Jackson formed a partnership with fellow lawyer John Overton, dealing in claims for land reserved by treaty for the Cherokee and Chickasaw.[33] Like many of their contemporaries, they dealt in such claims although the land was in Indian territory. Most of the transactions involved grants made under a 'land grab' act of 1783 that briefly opened Indian lands west of the Appalachians within North Carolina to claim by that state's residents. He was one of the three original investors who founded Memphis, Tennessee, in 1819.[34]

After moving to Nashville, Jackson became a protege of William Blount, a friend of the Donelsons and one of the most powerful men in the territory. Jackson became attorney general in 1791, and he won election as a delegate to the Tennessee constitutional convention in 1796.[27] When Tennessee achieved statehood that year, he was elected its only U.S. Representative. He was a member of the Democratic-Republican Party, the dominant party in Tennessee.[35] As a representative, Jackson staunchly advocated for the rights of Tennesseans against Native American tribal interests. He strongly opposed the Jay Treaty and criticized George Washington for allegedly removing Democratic-Republicans from public office. Jackson joined several other Democratic-Republican congressmen in voting against a resolution of thanks for Washington, a vote that would later haunt him when he sought the presidency.[36] In 1797, the state legislature elected him as U.S. senator. Jackson seldom participated in debate and found the job dissatisfying. He pronounced himself "disgusted with the administration" of President John Adams and resigned the following year without explanation.[37] Upon returning home, with strong support from western Tennessee, he was elected to serve as a judge of the Tennessee Supreme Court[38] at an annual salary of $600.[39] Jackson's service as a judge is generally viewed as a success and earned him a reputation for honesty and good decision-making.[40] Jackson resigned the judgeship in 1804. His official reason for resigning was ill health. He had been suffering financially from poor land ventures, and so it is also possible that he wanted to return full-time to his business interests.[41]

After arriving in Tennessee, Jackson won the appointment of judge advocate of the Tennessee militia.[42] In 1802, while serving on the Tennessee Supreme Court, he declared his candidacy for major general, or commander, of the Tennessee militia, a position voted on by the officers. At that time, most free men were members of the militia. The organizations, intended to be called up in case of armed conflicts, resembled large social clubs. Jackson saw it as a way to advance his stature.[43] With strong support from western Tennessee, he tied with John Sevier with seventeen votes. Sevier was a popular Revolutionary War veteran and former governor, the recognized leader of politics in eastern Tennessee. On February 5, Governor Archibald Roane broke the tie in Jackson's favor.[44] Jackson had also presented Roane with evidence of land fraud against Sevier. Subsequently, in 1803, when Sevier announced his intention to regain the governorship, Roane released the evidence. Jackson then published a newspaper article accusing Sevier of fraud and bribery. Sevier insulted Jackson in public, and the two nearly fought a duel over the matter. Despite the charges leveled against Sevier, he defeated Roane and continued to serve as governor until 1809.[45]

Planting career and controversy

refer to caption
Notice of reward offered by Jackson for return of an enslaved man[46]

In addition to his legal and political career, Jackson prospered as planterslave owner, and merchant. He built a home and the first general store in Gallatin, Tennessee, in 1803. The next year, he acquired the Hermitage, a 640-acre (259 ha) plantation in Davidson County, near Nashville. He later added 360 acres (146 ha) to the plantation, which eventually totaled 1,050 acres (425 ha). The primary crop was cotton, grown by slaves—Jackson began with nine, owned as many as 44 by 1820, and later up to 150, placing him among the planter elite. Jackson also co-owned with his son Andrew Jackson Jr. the Halcyon plantation in Coahoma County, Mississippi, which housed 51 slaves at the time of his death.[47] Throughout his lifetime, Jackson may have owned as many as 300 slaves.[48][49]

Men, women, and child slaves were owned by Jackson on three sections of the Hermitage plantation. Slaves lived in extended family units of between five and ten persons and were quartered in 400 square feet (37 m2) cabins made either of brick or logs. The size and quality of the Hermitage slave quarters exceeded the standards of his times. To help slaves acquire food, Jackson supplied them with guns, knives, and fishing equipment. At times he paid his slaves with money and coins to trade in local markets. The Hermitage plantation was a profit-making enterprise. Jackson permitted slaves to be whipped to increase productivity or if he believed his slaves' offenses were severe enough.[49] At various times he posted advertisements for fugitive slaves who had escaped from his plantation. In one advertisement placed in the Tennessee Gazette in October 1804, Jackson offered "ten dollars extra, for every hundred lashes any person will give him, to the amount of three hundred."[50]

The controversy surrounding his marriage to Rachel remained a sore point for Jackson, who deeply resented attacks on his wife's honor. By May 1806, Charles Dickinson, who, like Jackson, raced horses, had published an attack on Jackson in the local newspaper, and it resulted in a written challenge from Jackson to a duel. Since Dickinson was considered an expert shot, Jackson determined it would be best to let Dickinson turn and fire first, hoping that his aim might be spoiled in his quickness; Jackson would wait and take careful aim at Dickinson. Dickinson did fire first, hitting Jackson in the chest. The bullet that struck Jackson was so close to his heart that it could not be removed. Under the rules of dueling, Dickinson had to remain still as Jackson took aim and shot and killed him. Jackson's behavior in the duel outraged many in Tennessee, who called it a brutal, cold-blooded killing and saddled Jackson with a reputation as a violent, vengeful man. He became a social outcast.[51]

After the Sevier affair and the duel, Jackson was looking for a way to salvage his reputation. He chose to align himself with former vice president Aaron Burr. Burr's political career ended after the killing of Alexander Hamilton in a duel in 1804; in 1805 he set out on a tour of what was then the western United States.[52] Burr was extremely well received by the people of Tennessee, and stayed for five days at the Hermitage.[53] Burr's true intentions are not known with certainty. He seems to have been planning a military operation to conquer Spanish Florida and drive the Spanish from Texas.[54] To many westerners like Jackson, the promise seemed enticing.[55] Western American settlers had long held bitter feelings towards Spain due to territorial disputes and their persistent failure to stop Indians living in Spanish territory from raiding American settlements.[56] On October 4, 1806, Jackson addressed the Tennessee militia, declaring that the men should be "at a moment's warning ready to march."[57] On the same day, he wrote to James Winchester, proclaiming that the United States "can conquer not only the Floridas [at that time there was an East Florida and a West Florida.], but all Spanish North America." He continued:

I have a hope (Should there be a call) that at least, two thousand Volunteers can be lead into the field at a short notice—That number commanded by firm officers and men of enterprise—I think could look into Santafee and Maxico—give freedom and commerce to those provinces and establish peace, and a permanent barier against the inroads and attacks of forreign powers on our interior—which will be the case so long as Spain holds that large country on our borders.[58]

Jackson agreed to provide boats and other provisions for the expedition.[59] However, on November 10, he learned from a military captain that Burr's plans apparently included seizure of New Orleans, then part of the Louisiana Territory of the United States, and incorporating it, along with lands won from the Spanish, into a new empire. He was further outraged when he learned from the same man of the involvement of Brigadier General James Wilkinson, whom he deeply disliked, in the plan.[60] Jackson acted cautiously at first, but wrote letters to public officials, including President Thomas Jefferson, vaguely warning them about the scheme. In December, Jefferson, a political opponent of Burr, issued a proclamation declaring that a treasonous plot was underway in the West and calling for the arrest of the perpetrators. Jackson, safe from arrest because of his extensive paper trail, organized the militia. Burr was soon captured, and the men were sent home.[61] Jackson traveled to Richmond, Virginia, to testify on Burr's behalf in trial. The defense team decided against placing him on the witness stand, fearing his remarks were too provocative. Burr was acquitted of treason, despite Jefferson's efforts to have him convicted. Jackson endorsed James Monroe for president in 1808 against James Madison. The latter was part of the Jeffersonian wing of the Democratic-Republican Party.[62] Jackson lived relatively quietly at the Hermitage in the years after the Burr trial, eventually accumulating 640 acres of land.[63]

Military career

Man in blue military uniform, white pants, and boots, holding sword
General Andrew Jackson as pictured in Harper's Magazine, Vol 28, War with the Creek Indians, page 605, 1864

War of 1812

Creek campaign and treaty

Leading up to 1812, the United States found itself increasingly drawn into international conflict. Formal hostilities with Spain or France never materialized, but tensions with Britain increased for a number of reasons. Among these was the desire of many Americans for more land, particularly British Canada and Florida, the latter still controlled by Spain, Britain's European ally.[64] On June 18, 1812, Congress officially declared war on the United Kingdom of Great Britain and Ireland, beginning the War of 1812.[65] Jackson responded enthusiastically, sending a letter to Washington offering 2,500 volunteers.[66] However, the men were not called up for many months. Biographer Robert V. Remini claims that Jackson saw the apparent slight as payback by the Madison administration for his support of Burr and Monroe. Meanwhile, the United States military repeatedly suffered devastating defeats on the battlefield.[67]

On January 10, 1813, Jackson led an army of 2,071 volunteers[68] to New Orleans to defend the region against British and Native American attacks.[69][70][71] He had been instructed to serve under General Wilkinson, who commanded Federal forces in New Orleans. Lacking adequate provisions, Wilkinson ordered Jackson to halt in Natchez, then part of the Mississippi Territory, and await further orders. Jackson reluctantly obeyed.[72] The newly appointed Secretary of WarJohn Armstrong Jr., sent a letter to Jackson dated February 6 ordering him to dismiss his forces and to turn over his supplies to Wilkinson.[73] In reply to Armstrong on March 15, Jackson defended the character and readiness of his men, and promised to turn over his supplies. He also promised, instead of dismissing the troops without provisions in Natchez, to march them back to Nashville.[74] The march was filled with agony. Many of the men had fallen ill. Jackson and his officers turned over their horses to the sick.[75] He paid for provisions for the men out of his own pocket.[76] The soldiers began referring to their commander as "Hickory" because of his toughness, and Jackson became known as "Old Hickory".[77] The army arrived in Nashville within about a month. Jackson's actions earned him respect and praise from the people of Tennessee.[78] Jackson faced financial ruin, until his former aide-de-camp Thomas Benton persuaded Secretary Armstrong to order the army to pay the expenses Jackson had incurred.[79] On June 14, Jackson served as a second in a duel on behalf of his junior officer William Carroll against Jesse Benton, the brother of Thomas. On September 3, Jackson and his top cavalry officer, Brigadier General John Coffee, were involved in a street brawl with the Benton brothers. Jackson was severely wounded by Jesse with a gunshot to the shoulder.[80][81]

Map showing in dark orange land areas ceded by Indians
In the Treaty of Fort Jackson, the Muscogee surrendered large parts of present-day Alabama and Georgia.

On August 30, 1813, a group of Muscogee (or Creek) called the Red Sticks, so named for the color of their war paint, perpetrated the Fort Mims massacre. During the massacre, hundreds of white American settlers and non-Red Stick Creeks were slaughtered. The Red Sticks, led by William Weatherford (also called Red Eagle) and Peter McQueen, had broken away from the rest of the Creek Confederacy, which wanted peace with the United States. They were allied with Tecumseh, a Shawnee chief who had launched Tecumseh's War against the United States, and who was fighting alongside the British. The resulting conflict became known as the Creek War.[70]

Jackson, with 2,500 American soldiers, was ordered to crush the Red Sticks. On October 10, he set out on the expedition, his arm still in a sling from fighting the Bentons. Jackson established Fort Strother as a supply base. On November 3, Coffee defeated a band of Red Sticks at the Battle of Tallushatchee.[82] Coming to the relief of friendly Creeks besieged by Red Sticks, Jackson won another decisive victory at the Battle of Talladega.[83] In the winter, Jackson, encamped at Fort Strother, faced a severe shortage of troops due to the expiration of enlistments and chronic desertions. He sent Coffee with the cavalry (which abandoned him) back to Tennessee to secure more enlistments. Jackson decided to combine his force with that of the Georgia militia, and marched to meet the Georgia troops. From January 22–24, 1814, while on their way, the Tennessee militia and allied Muscogee were attacked by the Red Sticks at the Battles of Emuckfaw and Enotachopo Creek. Jackson's troops repelled the attackers, but outnumbered, were forced to withdraw to Fort Strother.[84] Jackson, now with over 2,000 troops, marched most of his army south to confront the Red Sticks at a fortress they had constructed at a bend in the Tallapoosa River. Jackson, together with Lower Creek and Cherokee allies and enjoying an advantage of more than 2 to 1, engaged them on March 27 at the Battle of Horseshoe Bend. An initial artillery barrage did little damage to the well-constructed fort. A subsequent Infantry charge, in addition to an assault by Coffee's cavalry and diversions caused by the allied Creeks, overwhelmed the Red Sticks.[85]

White-haired man in blue army uniform with epaulettes
Portrait by Ralph E. W. Earl, c. 1837

The campaign ended three weeks later with Red Eagle's surrender, although some Red Sticks such as McQueen fled to East Florida.[86] On June 8, Jackson accepted a commission as brigadier general in the United States Army, and 10 days later became a major general, in command of the Seventh Military Division.[87] Subsequently, Jackson, with Madison's approval, imposed the Treaty of Fort Jackson. The treaty required the Muscogee, including those who had not joined the Red Sticks, to surrender 23 million acres (8,093,713 ha) of land to the United States.[86] Most of the Creeks bitterly acquiesced.[88] Though in ill-health from dysentery, Jackson then turned his attention to defeating Spanish and British forces. Jackson accused the Spanish of arming the Red Sticks and of violating the terms of their neutrality by allowing British soldiers into the Floridas.[89] The first charge was true,[90] while the second ignored the fact that it was Jackson's threats to invade Florida which had caused them to seek British protection.[91] In the November 7 Battle of Pensacola, Jackson defeated British and Spanish forces in a short skirmish. The Spanish surrendered and the British fled. Weeks later, he learned that the British were planning an attack on New Orleans, which sat on the mouth of the Mississippi River and held immense strategic and commercial value. Jackson abandoned Pensacola to the Spanish, placed a force in Mobile, Alabama, to guard against a possible invasion there, and rushed the rest of his force west to defend the city.[92]

The Creeks coined their own name for Jackson, Jacksa Chula Harjo or "Jackson, old and fierce."[93]

Battle of New Orleans

Blue U.S. soldiers stand behind an earthen wall as red-coated British soldiers charge. Jackson stands atop the parapet with his right hand outstretched and holding a sword.
The Battle of New Orleans. General Andrew Jackson stands on the parapet of his defenses as his troops repulse attacking Highlanders, by painter Edward Percy Moran in 1910.
Gray-haired man in blue army coat and black overcoat has his left glove on and right glove on the ground. He is writing on papers and stands beside a cannon.
Jackson at the Battle of New Orleans, painted by Thomas Sully in 1845 from an earlier portrait he had completed from life in 1824

After arriving in New Orleans on December 1, 1814,[94] Jackson instituted martial law in the city, as he worried about the loyalty of the city's Creole and Spanish inhabitants. At the same time, he formed an alliance with Jean Lafitte's smugglers, and formed military units consisting of African-Americans and Muscogees,[95] in addition to recruiting volunteers in the city. Jackson received some criticism for paying white and non-white volunteers the same salary.[96] These forces, along with U.S. Army regulars and volunteers from surrounding states, joined with Jackson's force in defending New Orleans. The approaching British force, led by Admiral Alexander Cochrane and later General Edward Pakenham, consisted of up to 10,000 soldiers, many of whom had served in the Napoleonic Wars.[95] Jackson had only about 5,000 men, most of whom were inexperienced and poorly trained.[97]

The British arrived on the east bank of the Mississippi River on the morning of December 23. That evening, Jackson attacked the British and temporarily drove them back.[98] On January 8, 1815, the British launched a major frontal assault against Jackson's defenses. An initial artillery barrage by the British did little damage to the well-constructed American defenses. Once the morning fog had cleared, the British launched a frontal assault, and their troops made easy targets for the Americans protected by their parapets. Despite managing to temporarily drive back the American right flank, the overall attack ended in disaster.[99] For the battle on January 8, Jackson admitted to only 71 total casualties. Of these, 13 men were killed, 39 wounded, and 19 missing or captured. The British admitted 2,037 casualties. Of these, 291 men were killed (including Pakenham), 1,262 wounded, and 484 missing or captured.[100] After the battle, the British retreated from the area, and open hostilities ended shortly thereafter when word spread that the Treaty of Ghent had been signed in Europe that December. Coming in the waning days of the war, Jackson's victory made him a national hero, as the country celebrated the end of what many called the "Second American Revolution" against the British.[101] By a Congressional resolution on February 27, 1815, Jackson was given the Thanks of Congress and awarded a Congressional Gold Medal.[38]

Alexis de Tocqueville ("underwhelmed" by Jackson according to a 2001 commentator) later wrote in Democracy in America that Jackson "was raised to the Presidency, and has been maintained there, solely by the recollection of a victory which he gained, twenty years ago, under the walls of New Orleans."[102] Some have claimed that, because the war was already ended by the preliminary signing of the Treaty of Ghent, Jackson's victory at New Orleans was without importance aside from making him a celebrated figure. However, the Spanish, who had sold the Louisiana Territory to France, disputed France's right to sell it to the United States through the Louisiana Purchase in 1803.[103] In April 1815, Spain, assuming that the British had won at New Orleans, asked for the return of the Louisiana Territory. Spanish representatives claimed to have been assured that they would receive the land back.[104] Furthermore, Article IX of the Treaty of Ghent stipulated that the United States must return land taken from the Creeks to their original owners, essentially undoing the Treaty of Fort Jackson. Thanks to Jackson's victory at New Orleans, the American government felt that it could safely ignore that provision and it kept the lands that Jackson had acquired.[103]

Enforced martial law in New Orleans

Two soldiers stand trial. Several other men gather around.
Trial of Robert Ambrister during the Seminole War. Ambrister was one of two British subjects executed by General Jackson. (1848)

Jackson, still not knowing for certain of the treaty's signing, refused to lift martial law in the city. State senator Louis Louaillier had written an anonymous piece in the New Orleans newspaper, challenging Jackson's refusal to release the militia after the British ceded the field of battle. Jackson attempted to find the author and, after Louiallier admitted to having written the piece, he was imprisoned.[105] In March 1815, after U.S. District Court Judge Dominic A. Hall signed a writ of habeas corpus on behalf of Louaillier, Jackson ordered Hall's arrest.[106] Jackson did not relent his campaign of suppressing dissent until after ordering the arrest of a Louisiana legislator, a federal judge, and a lawyer, and after the intervention of State Judge Joshua Lewis. Lewis was simultaneously serving under Jackson in the militia, and also had signed a writ of habeas corpus against Jackson, his commanding officer, seeking Judge Hall's release.[107]

Civilian authorities in New Orleans had reason to fear Jackson—he summarily ordered the execution of six members of the militia who had attempted to leave. Their deaths were not well publicized until the Coffin Handbills were circulated during his 1828 presidential campaign.[108]

First Seminole War

Bust of Jackson in military uniform. Hair is wavy and falls partway down the forehead.
Teracotta bust of General Jackson by William Rush, 1819

Following the war, Jackson remained in command of troops on the southern border of the U.S. He conducted business from the Hermitage.[109] He signed treaties with the Cherokee and Chickasaw which gained for the United States large parts of Tennessee and Kentucky.[110] The treaty with the Chickasaw, finally agreed to later in the year, is commonly known as the Jackson Purchase.[34]

Jackson would soon find himself embroiled in another conflict in the Floridas. Several Native American tribes, collectively known as the Seminole, straddled the border between the U.S. and Florida. The Seminole, in alliance with escaped slaves, frequently raided Georgia settlements before retreating back into Florida. These skirmishes continually escalated into the conflict now known as the First Seminole War.[111] In 1816, Jackson led a detachment into Florida and at the Battle of Negro Fort destroyed the community of escaped slaves and their descendants.[112] Jackson was then ordered by President Monroe in December 1817 to lead a campaign in Georgia against the Seminole and Creek. Jackson was also charged with preventing Florida from becoming a refuge for runaway slaves, after Spain promised freedom to fugitive slaves. Critics later alleged that Jackson exceeded orders in his Florida actions. His orders from President Monroe were to "terminate the conflict."[113] Jackson believed the best way to do this was to seize Florida from Spain once and for all. Before departing, Jackson wrote to Monroe, "Let it be signified to me through any channel ... that the possession of the Floridas would be desirab