16. ANDREW JACKSON
After about a decade of monetary manipulations on the part of the Second Bank of the U.S., the American people, once again, had had just about enough. Opponents of the Bank nominated a famous senator from Tennessee, Andrew Jackson, the hero ofthe Battle of New Orleans, to run for president. His home he named "The Hermitage". No one gave Jackson a chance initially. The Bank had long-ago learned how the political process could be controlled with money.
To the surprise and dismay of the Money Changers, Jackson was swept into office in 1828. Jackson was determined to kill the Bank at the first opportunity, and wasted no time to trying to do so. But the Bank's 20 year charter didn't come up for renewal until 1836, the last year of his second term - if he could survive that long. During his first term, Jackson contented himself with rooting out the Bank's many minions from government service. He fired 2,000 of the 11,000 employees ofthe federal government.
In 1832, with his re-election approaching, the Bank struck an early blow, hoping Jackson would not want to stir up controversy. It asked Congress to pass a bank charter renewal bill four years early. Congress complied, and sent it to the President for signing. But Jackson weighed in with both feet. "Old Hickory," never a coward, vetoed the bill. His veto message is one of the great American documents. It clearly lays out the responsibility of the American government towards its citizens - rich and poor.
"It is not our own citizens only who are to receive the bounty of our Government. More than eight millions of the stock of this bank are held by foreigners… It is easy to conceive that great evils to our country and its institutions might flow from such a concentration of power in the hands of a few irresponsible to the people.
Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country?… Controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence… would be more formidable and dangerous than a military power of the enemy…
It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes… If [government] would confine itself to equal protection, and, as Heaven does its rains, shower its favor alike on the high and the low, the rich and the poor, it would be an unqualified blessing..
In the act before me there seems to be a wide and unnecessary departure from these just principles.. Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by act of Congress…
If we can not at once, in justice to interests vested under improvident legislation, make our Government what it ought to be, we can at least take a stand against all new grants of monopolies and exclusive privileges, against any prostitution of our Government to the advancement of the few at the expense of the many, and in favor of compromise and gradual reform in our code of laws and system of political economy.
I have now done my duty to my country. If sustained by my fellow-citizens, I shall be grateful and happy; if not, I shall find in the motives which impel me ample grounds for contentment and peace. In the difficulties which surround us and the dangers which threaten our institutions there is cause for neither dismay nor alarm. For relief and deliverance let us firmly rely on that kind Providence which I am sure watches with peculiar wisdom over our countrymen. Through His abundant goodness and their patriotic devotion our liberty and Union win be preserved." - AndrewJackson
Jackson also declared:
"If Congress has the right to issue paper money, it was given them to be used by themselves, and not to be delegated to indiviuals or corporations. "
Later that year, in July 1832, Congress was unable to override Jackson's veto. Now Jackson had to stand for re-election. Jackson took his argument directly to the people. For the first tirne in U.S. history, a candidate took a presidential campaign on the road. Before then, presidential candidates stayed at home and looked presidential. His campaign slogan was "Bank and no Jackson, or no Bank and Jackson!"
Incredibly (unless one understands who funds university endowment funds and research dollars), some modern historians have completely overlooked this war between Jackson and the Bank. Yet, his presidency has little meaning without understanding this issue.
The National Republican Party ran Senator Henry Clay against Jackson. Despite the fact that the Bank poured in over $3,000,000 into Clay's campaign, an enormous sum at that time, Jackson was re-elected by a landslide in November of 1832.
Despite his presidential victory, Jackson knew the battle was only beginning: "The hydra of corruption is only scotched, not dead," said the newly-elected President. Jackson ordered his new Secretary of the Treasury, Louis McLane, to start removing the government's deposits from the Second Bank of the U.S. and to start placing them in state banks. McLane refused to do so. Jackson fired him and appointed William J. Duane as the new Secretary of the Treasury. Duane also refused to comply with the President's requests, and so Jackson fired him as well, and then appointed Roger B. Taney to the office. Taney did as told and withdrew government funds from the bank, starting on October 1, 1833. Jackson was jubilant: "I have it chained. I am ready with screws to draw every tooth and then the stumps." But the Bank was not through fighting yet.
Its head, Nlcholas Biddle, uset his influence to get the Senate to reject Taney's nomination.
Then, in a rare, public display of arrogance, Biddle threatened to cause a national economic depression if the Bank were not rechartered. He declared war:
"This worthy President thinks that because he has scalped Indians and imprisoned Judges, he is to have his way with the Bank. He is mistaken."
Next, in an unbelievable fit of honesty for a central banker, Biddle admitted that the bank was going to make money scarce in order to force Congress to restore the Bank:
"Nothing but widespread suffering will produce any effect on Congress… Our only safety is in pursuing a steady course of firm [monetary] restriction -and I have no doubt that such a course will ultimately lead to restoration of the currency and the re-charter of the Bank."
What a stunning revelation! Here was the pure truth, revealed with shocking clarity. Biddle intended to use the money contraction power given to the Bank to cause a massive depression until America gave in. Unfortunately, this has happened time and time again throughout U.S. history, though without the blunder of Biddle's arrogant admission, and may be about to happen again in our time.
So much for the importance to the common good of central bank independence (or so called "autonomy") from political accountability and control.
Nicholas Biddle made good on his threat. The Bank sharply contracted the money supply by calling in old loans and refusing to extend new ones. A financial panic ensued, followed by a deep economic depression. Predictably, Biddle blamed Jackson for the crash, saying that it was caused by the withdrawal of federal funds from the Bank. Unfortunately, his plan worked well. Wages and prices sagged. Unemployment soared along with business bankruptcies. The nation quickly went into an uproar.
Newspaper editors blasted Jackson in editorials. A~er all, he was the President then. The Bank threatened to withhold payments to Congressmen which, at the time, could legally be made directly to key politicians for their support. Within only months, Congress assembled in what was called the "Panic Session."
Six months after he had withdrawn funds from the bank, Jackson was officially censured by a resolution which passed the Senate by a vote of 26 to 20. It was the first time a President had ever been censured by Congress. Jackson lashed out at the Bank.
"You are a den of vipers. I intend to rout you out and by the Eternal God I wiU rout you out."
America's fate teetered on a knife edge. If Congress could muster enough votes to override Jackson's veto, the Bank would be granted another 20-year monopoly or more over America's money - time enough to consolidate its already great power. Biddle's hod cunning strategy was working.
Then something close to a miracle occurred. The Governor of Pennsylvania, where the 2nd BUS was headquartered, came out supporting the President and strongly criticized the Bank. On top of that, Biddle had been caught boasting in public about the Bank's plan to crash the economy. Suddenly the tide shifted.
In April of 1834, the House of Representatives voted 134 to 82 against re-chartenng the Bank. This was followed up by an even more lopsided vote to establish a special committee to investigate whether the Bank had caused the crash.
When the investigating committee arrived at the Bank's door in Philadelphia, armed with a subpoena to examine the books, Biddle refused to give them up. Nor would he allow any inspection of correspondence with Congressmen relating to their personal loans and advances. Biddle also arrogantly refused to testify before the committee back in Washington.
OnJanuary 8, 1835, eleven years after taking office, Jackson paid off the final installment on the national debt which had been necessitated by allowing the banks to issue currency to buy government bonds, rather than simply issuing Treasury notes without such debt. He was the only President ever to pay off the national debt.
A few weeks later, on January 30, 1835, an assassin by the name of Richard Lawrence tried to shoot President Jackson. Both pistols misfired. Lawrence was later found not guilty by reason of insanity. After his release, he bragged to friends that powerful people in Europe had put him up to the task and promised to protect him if he were caught.
The following year, when its charter ran out, the Second Bank of the United States ceased functioning as the nation's central bank. Biddle was later arrested and charged with fraud. He was tried and acquitted, but died shortly thereafter while still tied up in civil suits. The Second Bank of the US went belly up. The fourth American Bank War had ended in the fourth defeat for the Money Changers.
After his second term as President, Jackson retired to The Hermitage outside Nashville. He is still remembered for his determination to "kill the Bank". In fact, he killed it so well that it took the Money Changers a full century - until 1935 (with the passage of the National Bank Act of 1935) - to undo the damage and reach the same point in their schemes. Late in life, when asked what his most important accomplishment had been, the war hero Jackson replied. "I killed the Bank."
Jackson also warned future generations of Americans:
"The bold effort the present bank had made to control the government… the distress it had wantonly produced … are but premonitions of the fate that awaits the American people should they be deluded into a perpetuation of this institution or the establishment of another like it."
Acknowledgement and credits
The Money Masters: How International Bankers Gained Control of America
Produced by Patrick S. J. Carmack
Directed by Bill Still
Royalty Production Company 1998