Chief Guardian of Economy

1. Chief Guardian of Economy George Washington and Andrew Jackson

2. George Washington and the Bank • Washington (1st President) – took office in 1789, served for 2 years • Precedent: Act or decision that sets an example for others to follow. • Precedent = CABINET – advisors to help the President run the country • Today there are 15 departments in the Presidential cabinet • Washington appointed Alexander Hamilton to be Secretary of the Treasury

3. George Washington and the Bank • Hamilton faced a huge national debt • During Revolution, the government had borrowed from foreign countries and citizens to pay soldiers and buy supplies. • Government issued bonds: • A certificate that promises to repay the money loaned, plus interest, by a certain date

4. George Washington and the Bank • Hamilton wanted to pay off the debt in full but some Southern states did not agree that the government should help states with debt from the war • Compromise: • Capital city would be established between MD and VA = Washington D.C. IF the Southern states agreed that Congress could pay off state debts.

5. George Washington and the Bank Next, Hamilton needed to strengthen the economy: agriculture and industry Called on Congress to set up a National Bank in 1791 Government would deposit $ from taxes in Bank, Bank would issue paper money to pay gov’t bills, and make loans to farmers and businesses

6. George Washington and the Bank • WAIT!!! Does Congress have the power to create a National Bank under the Constitution? • Was Washington acting as a strong or weak President? • How would you evaluate Washington’s role as Chief Guardian of the Economy?

7. Andrew Jackson and the Bank War • Andrew Jackson (7th president, 1829-2837), • first westerner in White House, • represented common man, • nicknamed Old Hickory

8. Jackson and the Bank War • Bank of the United States • Controlled loans made by state banks – could limit the amount that state banks could lend out • Created by Congress but controlled by private bankers • Nicholas Biddle – President of the Bank – came from a rich family and was vain and arrogant

9. Jackson and the Bank War • Jackson, like many Democrats, did not like the Bank. • Felt it was undemocratic….private bankers running the bank got rich off of public funds • Jackson especially disliked Biddle and felt he used the Bank to benefit the rich • Biddle and other Whigs (the other main political party at the time) planned to use the Bank to prevent Jackson from being reelected. • Tried to renew the charter for the Bank in 1832 – reelection year, instead of 1836

10. Jackson and the Bank War • Jackson was sick in bed when he heard about the plan to renew the charter and said, “The Bank is trying to kill me, but I will kill it!” • Jackson vetoed the Bank bill • Unconstitutional • Bank helped rich at the expense of the common man • “When the laws undertake to make the rich richer…the humble members of society – the farmers, mechanics and laborers –….have a right to complain of the injustice to their government.”

11. Jackson and the Bank War Whigs hoped the veto would undermine Jackson’s reelection bid and nominated Henry Clay to run against Jackson. Jackson won by a landslide – people rejected the Bank too!

12. Jackson and Bank War • Bank was forced to close early – Jackson wouldn’t wait until 1836 when charter expired • Ordered Sec. of Treasury Roger Taney to stop depositing federal money in Bank • Federal money was put into state banks – “pet banks” • Bank closed but led to an economic crisis of 1837 because state banks could now lend without limit – and they did!

13. Jackson and the Bank War In what ways did Jackson exercise his role as Chief Guardian of the Economy? Was Jackson acting as a strong or weak President? Should Jackson be held responsible for the Panic of 1837?