Chapter 10

A Changing NationStates’ Rights and the Economy

Section 5 Essential Question

How did old issues take a new shape in the conflict over a national bank and tariffs?

Section 5: States’ Rights and the Economy The Bank War The second Bank of the United States earned the

support of the business people. Pros

Bank made loans to businesses Safe place for government’s money Paper currency it issued was stable Careful policies created confidence in other banks

Cons Limited the money state banks could lend Some thought the bank only benefited the wealthy

Jackson vs. The Monster Bank’s worst enemy was Jackson

He especially disliked the bank’s president – Nicholas Biddle

He believed Biddle used his position to do favors for other rich people

Section 5: States’ Rights and the Economy The bank fight increased the power of the President

Biddle got congress to renew the bank’s charter in 1832 He thought that so many people would support the bank, that Jackson

would be afraid to veto the bill He was wrong

Jackson vetoed the bank He won re-election in 1832 by a huge margin

Defeating Henry Clay (a bank supporter – who helped Biddle get the charter approved in congress)

The bank veto showed that a president could get people involved and not bend to the will of congress

What were the arguments for and against the second Bank of the United States?

For; It helped business; it kept federal money safe; it issued a stable currency; it created confidence in U.S. Banks.

Against: It hurt farmers and small merchants; it restricted state banks; it helped the wealthy; it caused the economic crisis of 1819.

Section 5: States’ Rights and the Economy The Question of States RightsThe Constitution gives the federal government many significant

powers. The Tenth Amendment says that powers not specifically given to the federal government are reserved to the States or the People.

People had long debated where the balance of power should be More to states or more to federal government

Alien and Sedition Acts Virginia and Kentucky Resolutions Hartford Conventions

All had raised this question

How does the Tenth amendment limit federal powers?

It states that any powers not specifically given to the federal government are reserved to the state government.

Section 5: States’ Rights and the Economy

The Question of States Rights (cont) Nullification Crisis

Began in 1828 with a tariff on Iron, Textiles and other products The tariff helped manufacturers in the North

and West But it harmed southerners (they had to pay

more for goods) Vice President John C. Calhoun argued that

states had the right of nullification

Section 5: States’ Rights and the Economy

Arguments for Nullification If the government could enforce an ‘unjust’

law, could it also end slavery? Calhoun thought the following

The Union was formed by an agreement amongst the states

Each state kept certain powers to itself One of these powers was to nullify unjust

laws

Section 5: States’ Rights and the Economy Arguments against Nullification

Daniel Webster summarized it nicely We are all agents of the same supreme power, the

people Idea was that the U.S. had not been formed by the

states, but by the people within those states President vs. Vice President

Jackson – “Our Federal Union – It must be preserved”

Calhoun – “The Union – next to our liberty – the most dear”

Calhoun resigned as Vice-President under pressure

What was the position of Vice President John C. Calhoun on nullification?

He believed that nullification was a right that individual states had.

Section 5: States’ Rights and the Economy South Carolina Threatens to Secede

Tariff of 1832 passed by Congress Lowered some tariffs, but again raised the one on iron and textiles

SC called a state convention They voted to nullify the 1828 & 1832 tariffs

They said it ‘did not apply to SC’ The state warned the federal government not to use force to impose

the tariffs or SC would leave the union Jackson is Furious… He said..

The union cannot be dissolved Any attempt to do so was treason

Section 5: States’ Rights and the Economy Jackson goes to Congress

He asks for 2 bills 1 – to lower the 1828 and 1832 tariffs 2 – to use force to collect them from SC

Congress passes both laws SC backs down

They could not get other states to follow their lead Didn’t want to stand against the U.S. alone The crisis had been settled peacefully…. For now.

Section 5: States’ Rights and the Economy The End of the Jackson Era Martin Van Buren, Jackson’s Vice President, won the

presidency in 1836. Soon after he took office the economy was in a severe slump

because Britain was experiencing a economic slowdown, British manufacturers were buying less cotton which caused cotton prices to fall sharply.

American banks could not collect on the loans they made, and as a result, hundreds of banks went bankrupt.

The result was an economic collapse called the Panic of 1837.

What was the main cause of the Panic of 1837?

An economic crisis in Britain.

Section 5 Essential Question

How did old issues take a new shape in the conflict over a national bank and tariffs?

The issue of national powers versus state rights resurfaced in the struggle between Andrew Jackson and the Bank of the United States and Jackson’s refusal to allow states to nullify the tariff laws of the federal government.