States’ Rights and the EconomyPAGES 362-367

Objectives

Describe the disagreement over the Bank of the United States

Discuss the differing viewpoints on the balance of federal and state powers

Explain why South Carolina threatened to secede from the Union

Describe the economic crisis that began in 1837

Focus Question

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

Why would businesses support the Second National Bank?

1. Liked that the Bank made loans to businesses

2. The Bank was a safe place for the federal government to keep its money

3. The paper money it issued formed a stable currency

Its policies helped create confidence in banks all over the country

Why would many Americans dislike the Bank?

Andrew Jackson called the Bank “the Monster” Believed the Bank allowed

a small group of wealthy people to enrich themselves at the expense of ordinary people

Nicholas Biddle

Bank’s president

Came from a wealthy Philadelphia family

Was skilled at doing favors for powerful politicians

Biddle got Congress to renew the Bank’s charter in 1832, even though it still had 4 years to go What is Jackson’s response?

The President vowed, “The Bank… is trying to kill me, but I will kill it!” Jackson immediately vetoed

the bill

Fight over the Bank became a huge issue in the 1832 presidential election

Henry Clay ran against Jackson: strongly supported the Bank

Most voters stood behind Jackson: Jackson won reelection by a huge margin

Jackson’s Victory over the Bank

Helped to increase the powers of the presidency: showed that a determined

president could stir up the voters and face down powerful opponents in Congress

Bank’s charter ran out in 1836

An economic crisis struck a few months after Jackson left office

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

For: It helped businesses

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 causes the economic crisis of 1819

Why was there conflict over the powers available to state and federal governments?

The Constitution did not tell exactly where the federal government’s power ended and the states’ power began

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

A Crisis Erupts..

Congress passed a law that raised the tariff on iron, textiles, and other products

The tariff helped the North

However, Southerners had to pay much more for manufactured goods Southerners felt like Congress

was making them obey an unfair law

What is nullification?

An action by a state that cancels a federal law to which the state objects

Vice President John C. Calhoun of South Carolina argued that the states had the right of nullification

Arguments for Nullification

Southerners were afraid: if Congress could make them obey an unfair law, could it also use its power to end slavery?

Calhoun argued: after the U.S. was formed, each state kept certain powers One of them was the

power to nullify federal laws the people of the state considered unfair

Arguments against Nullification

Daniel Webster, Massachusetts governor argued: the U.S. had not been formed by the states, but by the entire American people

Jackson argued: “Our Federal Union– It must be preserved.”

The challenge: to Calhoun, states’ rights was more important than saving the Union

South Carolina Threatens to Secede

1832: Congress passed another tariff law

South Carolina held a state convention, which voted to nullify the tariffs

The state warned the federal government not to use force to impose the tariffs – if it did, S.C. would secede from the Union

Checkpoint: Why did South Carolina want to secede from the United States?

The state did not agree with the tariff laws

At a special convention, leaders said that the laws did not apply to South Carolina

If the federal government tried to forcibly impose the tariffs, South Carolina would secede

How did Jackson respond to South Carolina?

Put federal troops in South Carolina

Issued a “Proclamation to the People of South Carolina” It said that the Union could

not be dissolved

Warned that “disunion by armed force is treason”

Calhoun resigned as Vice President.

How did Jackson respond to South Carolina?

Asked Congress to allow the federal government to collect its tariff in South Carolina by force if necessary

At the same time, he supported a compromise bill that would lower the tariffs

South Carolina repealed its tariff nullification – the crisis had been settled peacefully

The Panic of 1837

Martin Van Buren succeeded Jackson as president

When he took office, the American economy was beginning a severe slump

The reason: Britain was experiencing an economic slowdown, so they were buying less cotton

Hundreds of banks went bankrupt

The economic collapse was called the “Panic of 1837”

The Election of 1840

Whig candidate William Henry Harrison ran against Van Buren

Harrison was portrayed as a “man of the people” who would feel right at home in a log cabin

The Whigs were in power and the Age of Jackson was over

Focus Question re-visited

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