Jack - In 1823 Nicholas Biddle succeeded Cheves as...

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In 1823, Nicholas Biddle succeeded Cheves as president of the Second Bank of the United States. Biddle changed the bank's focus back to the conservative approaches that favored the Northeast to the detriment of the speculative South and West. His strategy improved America's financial condition and stabilized the money supply, although it stifled growth in the South and West. In 1829, the election of Andrew Jackson as president of the United States brought the bank to the center of Americans' attention. As a Southerner and a strong believer in Jefferson's state-oriented view of government, Jackson was an outspoken enemy of the bank, although he refrained from meddling in the bank's affairs during his first term. Biddle made a major tactical blunder in 1832, however, by calling for Congress to renew the charter for the Second Bank of the United States for another 20 years—four years earlier than necessary. Despite growing national resentment of the bank, Congress approved the renewal but Jackson vetoed it and made the bank the major issue of his reelection campaign later that year. Jackson's Bank War, as it came to be called, quickly became an extremely divisive partisan issue, with Democrats supporting Jackson and Whigs supporting the bank. The controversy continued after Jackson won reelection, as the president and Congress battled over the issue. Exercising his executive power, Jackson quietly began removing federal deposits from the bank and placing them in state-chartered banks (also known as pet banks ). When the bank's charter expired in 1836, it was forced to close its doors once again. Biddle reopened the bank as a state bank that same year. Although the bank was initially successful, it failed in 1841 after investing in a speculative cotton venture that failed. The dissolution of the Second Bank of the United States in 1836 sparked another disastrous economic cycle for the country. By 1837, wild speculation, fueled mostly by inflated bank notes, initiated a serious financial depression. Without a central bank to stabilize the currency, the depression ran its course well into the mid- 1840s. Wild swings in currency values continued intermittently until 1863, when Congress passed the National Currency Act, requiring that all currency, including bank notes, be backed by the U.S. Treasury. Finally in 1913, Congress formed the Federal Reserve Bank, giving the United States a federally owned, central bank. "Bank of the United States." American History . 2007. ABC-CLIO. 19 Mar. 2007 <http://www.americanhistory.abc-clio.com>. After the War of 1812, the state banking system was in turmoil. Congress tried to restore order and finance debts from the war by establishing a second Bank of the United States. Like the First Bank, it was given a 20-year charter.
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This note was uploaded on 10/27/2011 for the course HIST 101 taught by Professor Gotman during the Spring '08 term at NYU.

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Jack - In 1823 Nicholas Biddle succeeded Cheves as...

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