Why did Andrew Jackson favore destruction of the national bank?

Answer 1

The problem with the Second Bank of the United States (SBUS) basically stemmed from the fact that the US Treasurer was required to deposit US funds in this bank. This effectively allowed the SBUS to print money and therefore devalue the dollar. The deposit of US Treasury funds essentially gave SBUS a monopoly on the issue of dollars, and consequently gave SBUS the ability to manipulate wars and the US economy.

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 phony gold and silver certificates, since SBUS would never have to fear a bankrun 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.

As president, Jackson worked to take away the federal charter of the Second Bank of the United States (it would continue to exist as a state bank). The second Bank had been authorized, during James Madison's tenure in 1816, for a 20 year period. Jackson opposed the national bank concept on ideological grounds. In Jackson's veto message (written by George Bancroft), the bank needed to be abolished because:

* He thought it was unconstitutional because he was a "strict Constitutionalist" (its charter rested on the elastic clause)

* 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

Jackson followed Jefferson as a supporter of the ideal of an "agricultural republic" and felt the bank improved the fortunes of an "elite circle" of commercial and industrial entrepreneurs at the expense of farmers and laborers. This "elite circle" is thought by some to include what conspiracy historians call the Illuminati.

After a titanic struggle, Jackson succeeded in destroying the bank by vetoing its 1832 re-charter by Congress and by withdrawing U.S. funds in 1833. The bank's money-lending functions were taken over by the legions of local and state banks that sprang up feeding an expansion of credit and speculation; the commercial progress of the nation's economy was noticeably dented by the resulting failures. However, it is questionable whether Jackson could have done anything to prevent this financial turmoil, because of the extent of the financial pyramid scheme existing since before Jackson was in office. The Austrian School of Economics holds that Jackson's defunding of the SBUS increased long-run financial stability in the US economy by revoking the SBUS powers mentioned previously.

(If my memory serves correctly, there were confounding variables in the 1830s, like drastic changes in British monetary policy, which prevents Jackson's actions from being judged on financial history alone.)

The U.S. Senate censured Jackson on March 27, 1834 for his actions in defunding the Bank of the United States; the censure was later expunged when the Jacksonians had a majority in the Senate.

The Federal Reserve System (the Fed) that exists today suffers from the same problems the SBUS suffered from, except that the Fed has even less restraints on it since the dollar lost its official gold backing in 1973.

Answer 2

Because it made the rich richer, put most of the money with a single person.

Answer 3

because he thought it made the rich richer