Bank War | Andrew Jackson, Nicholas Biddle & Economic Impact (2024)

FAQs

What were the effects of Jackson's war against Mr Biddle and the bank? ›

The people were with Jackson, and he was overwhelmingly elected to a second term. Biddle retaliated by making it more difficult for businesses and others to get the money they needed. This caused an economic contraction at the end of 1833 and into 1834. The bank charter expired in 1836.

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 most major effect of the Bank War of 1832 was inflation throughout the United States. It also resulted in periodic economic panics that only ceased in 1913 with the creation of the Federal Reserve.

In response, Biddle restricted the Bank's loans, tightening the nation's money supply in an effort to inspire public outrage toward Jackson's policies and force the recharter. Instead, Biddle's plan backfired, and the ensuing financial distress inspired greater suspicion of the Bank's power.

This bill passed Congress, but Jackson vetoed it, declaring that the Bank was "unauthorized by the Constitution, subversive to the rights of States, and dangerous to the liberties of the people." After his reelection, Jackson announced that the Government would no longer deposit Federal funds with the Bank and would ...

The removal of the government's deposits crippled the federal bank, and it dissolved in 1836. The next year, another financial panic, the Panic of 1837, swept the country.

The Bank of the United States, not to be left out, was blamed for bankrolling Jackson's opposition. (Ironically, Biddle himself had voted for Jackson). The bitterness that followed the election of 1824 closed the so-called “Era of Good Feelings” that had defined American politics in the years after the War of 1812.

The economy suffered without a national bank. State banks made too many loans and issued too much money. This caused an increase in spending and led to rising prices.

Andrew Jackson led the nation into an economic depression by ridding of the National Bank. He expanded the gap between the North and South states with the Nullification Act, which hindered at the South's trade with Europe. He also treated Native and African Americans horribly, creating the trail of tears.

Jackson's decision to divert federal deposits prompted his adversaries in the Senate to formally censure his actions as arbitrary and unconstitutional. The bank's president, Nicholas Biddle (1786-1944), responded to Jackson's actions by reducing loans and calling in debts.

What was the economic impact of Jackson's policies? ›

Following the credit crunch, the economy endured a bout of inflation—with prices rising 28 percent from 1833 to 1836, which critics of Jackson attributed to the easy-money policies of the banking sector, which was no longer required to practice sound money policies because the BUS was no longer there to rein it in.

Shortly after the election, Jackson ordered that federal deposits be removed from the second National Bank and put into state banks. Although Jackson's order met with heavy criticism from members of his administration, most of the government's money had been moved out of the Bank by late 1833.

Larry Schweikart and Michael Allen argued that Jackson's opposition was more political than philosophical: "What made Biddle dangerous...was not his capabilities as a bank president, but his political powers of patronage in a large institution with branches in many states - all with the power to lend.

How did the Bank War influence the economy and party competition? It increased wages, prices, and increased the value of money but this boom ended quickly causing a massive decline in the value of money. With this happened in politics the hard money, anti-bank wing of the Democratic Party came to power.

Bank War, in U.S. history, the struggle between President Andrew Jackson and Nicholas Biddle, president of the Bank of the United States, over the continued existence of the only national banking institution in the nation during the second quarter of the 19th century.

After the banks destruction, banking returned to being a decentralised business in which institutions were chartered by the individual states. The banks defeat also had profound implications for the role of the state in America in managing monetary policy.

The Panic of 1837 was a financial crisis in the United States that began a major depression (not to be confused with the Great Depression), which lasted until the mid-1840s. Profits, prices, and wages dropped, westward expansion was stalled, unemployment rose, and pessimism abounded.