The Nullification Crisis began prior to Andrew Jackson's presidency with the passage of the Tariff of 1828. A tariff is a tax levied on imported or exported goods. Lawmakers believed taxing imports would protect the country's agricultural economy by forcing American industrialists and merchants to purchase American raw materials. While the tariff increased Northern industrialists' profits, it also increased Southerners' cost of living. This is why it is most commonly known as the Tariff of Abominations.
Vice president and South Carolina native John C. Calhoun didn't support the Tariff of 1828. In 1829 he penned South Carolina Exposition and Protest, which was published anonymously by the South Carolina state legislature. Calhoun argued the federal government existed "at the will of the states." He further stated if the federal government passed a law a state disliked, the state could nullify, or cancel, the law within its borders. Nullification wasn't a new proposal—Thomas Jefferson and James Madison championed it in the late 18th century to ensure the federal government didn't abuse its power. However, nullification wasn't a hugely popular idea, even within the South.
The Tariff of 1832 revised the Tariff of Abominations, but not enough for South Carolinians. The South Carolina legislature enacted an Ordinance of Nullification on November 24, 1832. This document stated the federal Tariffs of 1828 and 1832 were "null, void, and no law, nor binding upon this State, its officers or citizens." The ordinance also said attempts by the federal government to collect tariff money would result in South Carolina's secession, or voluntary departure, from the United States.
In December 1832 Jackson released his "Proclamation to the People of South Carolina." This announcement warned South Carolinians the federal government was more powerful than state governments and "disunion by armed force is treason." That means an attempt to split the Union is a criminal betrayal of the government. Jackson's proclamation was followed by passage of the Force Bill on March 1, 1833, which lowered some tariffs from the 1832 bill. It also authorized use of the military to collect tariff money. The South Carolina legislature withdrew the Ordinance of Nullification on March 15. Unwilling to completely back down, it overturned the Force Bill three days later.The Nullification Crisis was a win for Jackson and his fellow nationalists and a loss for those who believed in the supremacy of states' rights. The crisis also furthered the political and ideological divide between the North and the South that culminated in the Civil War.
The first central bank in the United States was founded in 1791 by Alexander Hamilton. The institution's purposes were to regulate the country's supply of money, fund the debt from the American Revolution, and develop credit standards for state banks. The charter, or legal permission, for the Bank of the United States ran out in 1811, and the Jeffersonian Republicans refused to renew it. They were concerned about the power of a private banking institution that answered to its directors and stockholders, not to the government that kept its money there. Yet changes in the economy and Congress's political agenda led to passage of a charter for the Second Bank of the United States in 1816.
Andrew Jackson had concerns about the Second Bank much like those the Jeffersonian Republicans held in 1791. He believed a private central national bank put too much control in the hands of the wealthy. Jackson disdained the Second Bank and its restrictive policies that prevented the working class and poor obtaining loans for land and business ventures. Much to the consternation of bank president Nicholas Biddle, Jackson railed against the bank throughout 1829 and 1830.
Concerned about the future of the bank, Biddle consulted National Republicans Daniel Webster and Henry Clay. They recommended Biddle push for an early renewal of the bank's charter, which wasn't scheduled to expire until 1836. Renewal would mean the bank could continue operations as a national institution. Both houses of Congress approved the recharter bill in 1832. Furious, Jackson vetoed the bill.
The fate of the bank was the central issue surrounding the election of 1832 between Jackson and Clay. Jackson thought his victory gave him the right not only to refuse the charter but to destroy the bank itself. He removed the government's money from the bank to pay government expenses and directed all new funds be divided between 89 state banks. Biddle was so angry that he called in all the bank's loans. People had to pay back the money they owed, which resulted in an economic downturn and a shortage of new credit.The Senate formally expressed its disapproval through a censure in 1834, but Jackson didn't budge. Biddle eventually relaxed the bank's credit policies, and the censure was erased from the Senate's records. After the expiration of the bank's 20-year charter in 1836, Biddle obtained a charter from the state of Pennsylvania. The bank went out of business in 1841 following a series of bad investments.