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Why did Andrew Jackson oppose the second bank of the US?

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Jackson's veto message for the bill to re-charter the bank (written by George Bancroft), listed the following objections against the bank:
  • it was unconstitutional - Congress did not have the authority to create such a bank
  • it concentrated an excessive amount of the nation's financial strength into a single institution
  • it exposed the government to control by "foreign interests"
  • it exercised too much control over members of the Congress
  • it favored Northeastern states over Southern and Western states


He vetoed it on constitutional grounds, but he had long opposed the bank. The bill to re-charter was a power play, instigated by the bank president Nicholas Biddle and his supporters in Congress. It was passed in advance of the need to renew the charter in order to make the bank a campaign issue or else to scare Jackson into backing down and signing bill. The ploy backfired when Jackson won re-election handily.

More explanation
The national bank had become a political entity. In those days it made personal loans and it would curry favor by making attractive loans to certain Congressmen. It gave favorable treatment to businesses in the East and did little to help the farmers in the West.
One big problem with the Bank stemmed from the fact that the US Treasurer was required to deposit all US funds in this bank. Therefore the bank could lend out money without having to keep the reserves needed by private banks. It had the power to appreciably increase the money supply and inflate the currency as the federal reserve does today, but without the control of the President and Congress.
There was also a personal conflict. The bank president, Nicholas Biddle, was a member of the old Eastern establishment that had run the country from its beginning. Jackson was a westerner and the son of immigrants and did not belong to the old guard ,so they became political enemies. The bank had become in effect an arm of the anti-Jackson party.

How the Bank could increase the money supply and cause inflation To understand why SBUS had this power, consider the following scenario: If a man owed 100 ounces of gold in tariffs to the US, he could either have paid in gold or in SBUS credits, (which could be in the form of SBUS banknotes or SBUS checks). While the SBUS credits were technically in terms of gold, since the US Treasurer had to deposit them with the SBUS, the SBUS was never required to produce the gold for the US. Therefore the SBUS had wide-ranging powers to issue credit without a proper backing. Essentially, the US Treasury deposit allowed SBUS to issue unbacked gold and silver certificates, since SBUS would never have to fear a bank run from the US, like it might with its smaller depositors. In addition, there was legal precedent in the US for forcing bank depositors to never withdraw gold and silver from unhealthy banks. Therefore, by discretely issuing unsound money, the bank could manipulate interest rates, manipulate foreign exchange rates, and cause recessions.





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Jackson's veto message for the bill to re-charter the bank (written by George Bancroft), listed the following objections against the bank:
  • it was unconstitutional - Congress did not have the authority to create such a bank
  • it concentrated an excessive amount of the nation's financial strength into a single institution
  • it exposed the government to control by "foreign interests"
  • it exercised too much control over members of the Congress
  • it favored Northeastern states over Southern and Western states


He vetoed it on constitutional grounds, but he had long opposed the bank. The bill to re-charter was a power play, instigated by the bank president Nicholas Biddle and his supporters in Congress. It was passed in advance of the need to renew the charter in order to make the bank a campaign issue or else to scare Jackson into backing down and signing bill. The ploy backfired when Jackson won re-election handily.

More explanation
The national bank had become a political entity. In those days it made personal loans and it would curry favor by making attractive loans to certain Congressmen. It gave favorable treatment to businesses in the East and did little to help the farmers in the West.
One big problem with the Bank stemmed from the fact that the US Treasurer was required to deposit all US funds in this bank. Therefore the bank could lend out money without having to keep the reserves needed by private banks. It had the power to appreciably increase the money supply and inflate the currency as the federal reserve does today, but without the control of the President and Congress.
There was also a personal conflict. The bank president, Nicholas Biddle, was a member of the old Eastern establishment that had run the country from its beginning. Jackson was a westerner and the son of immigrants and did not belong to the old guard ,so they became political enemies. The bank had become in effect an arm of the anti-Jackson party.

How the Bank could increase the money supply and cause inflation To understand why SBUS had this power, consider the following scenario: If Bob owed 100 ounces of gold in tariffs to the US, he could either have paid in gold or in SBUS credits, (which could be in the form of SBUS banknotes or SBUS checks). While the SBUS credits are technically in terms of gold, since the US Treasurer must deposit them with the SBUS, the SBUS is never required to produce the gold for the US. Therefore the SBUS has wide-ranging powers to issue credit without a proper backing. Essentially, the US Treasury deposit allowed SBUS to issue unbacked gold and silver certificates, since SBUS would never have to fear a bank run from the US, like it might with its smaller depositors. In addition, there was legal precedent in the US for forcing bank depositors to never withdraw gold and silver from unhealthy banks.

Therefore, by discretely issuing unsound money, the SBUS could bribe politicians, manipulate interest rates, manipulate foreign exchange rates, and cause recessions. (To verify that the SBUS had these four powers, the reader should look up the Austrian School of Economics.) It is likely that the SBUS did all four of these things, which would have impoverished many Americans. Allegations of this sort of corruption is why Jackson campaigned on a platform of destroying the SBUS.
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