Sunday, May 2, 2010
A Little Bit Of History: Jackson And The Myth Of The Bank Wars
I've been working on some papers on early US history and how it's widely misunderstood. The series of work covers everything from early European-Native American interactions to current day issues. It is a work in progress.
If any of the few remaining readers of this little blog have any questions on US history, please let me know. While being rather dense overall, I am somewhat adept in US history studies :)
Below is a piece on Andrew Jackson and his legendary war with the centralized banking system.
Andrew Jackson's legendary fight against a centralized bank has become the stuff of legend. His comments and actions have become fodder for everything from commercials advocating gold purchases to conspiracy theories.
But in reality, Andrew Jackson didn't have an issue with a centralized bank, unless it was run by one of his political opponents. Far from the small government advocate he has been portrayed as, "Old Hickory" institutionalized some of the worst aspects of the federal government, including the spoils systems and a greatly increased budget. More than any president before him, Jackson consolidated power in the executive branch.
Jackson's war with the BUS (Bank of the US) stemmed from the fact that it's president, Nicholas Biddle, was in a position to fund Anti-Jacksonian politicians. Prior to becoming the head of the BUS, Biddle had served as the U.S. minister to France. He was wealthy, well educated and well spoken. He was also, by all accounts, an outstanding bank administrator. He ran the BUS with such acumen that the state chartered banks overwhelmingly supported the BUS being rechartered. In short, Biddle knew how to make people money.
There is little evidence that Biddle supported anti-Jacksonian political candidates. He didn't have to. Simply being in a position where he could threatened Jackson, Biddle (and "his" BUS) were dangerous and had to be eliminated.
Jackson used his talents at inflaming populist anger to rally against the BUS, and the very idea of a centralized bank. Using such Inflammatory rhetoric as "The bank is trying to kill me, but I will kill the bank." roused the sentiment that people more wealthy than the common man were evil and dangerous.
Upon being elected as president, Jackson promptly ordered the withdrawal of all US monies from the BUS. This was a blatantly unconstitutional move, and subsequently Jackson had two Treasurers refuse. Not until he appointed Roger B. Taney did he get his wish. Taney, a long time Jackson loyalist, was awarded a spot on the Supreme Court for his loyalty. Jackson had the US monies moved to a series of smaller banks, who's officials all had supported his political career, establishing a "spoils system" that endures to this day.
Jackson's "spoils banks" were hardly more reliable than a strong centralized bank. With the Texas revolt Mexican silver all but disappeared from the international market. The silver had fueled commerce in Europe, particularly in England. The lack of Mexican silver created inflation in America, but worse, it caused England to raise it's interest rates. The combination of price inflation domestically and the spike in interests rates from her prime lender spun the American economy into a tailspin. Jackson's banks were incapable of stopping the economic decline. Whether Biddle's BUS would have fared any differently will never be known. By then it operated only in limited capacity in Philadelphia.
It is vital to understand that Jackson, despite his claims, never sought to eliminate a centralized bank. He sought to replace one national banking institution, (the BUS) with another one that was even more centralized, (And run by pro-Jacksonians), a "A bank with a branch in each state, entirely national..."(!)
Jackson was ultimately successful in dismantling the BUS. But his reasons for doing so are widely misunderstood. Jackson was a president that would fit right into American politics today. Brash, outspoken, ambiguous, and power hungry, Andrew Jackson destroyed a stable US banking system for political gain, and in doing so acted as the very thing he rallied against.