Jackson’s anti-bank mandate

1833: One helluva year

The people who formed Rappahannock County in early 1833 were the kind that Andrew Jackson, the seventh President of the United States, loved. They were hardworking small farmers, workers in tanneries and flour manufacturing mills, saddlers, blacksmiths, merchants or day laborers making between 75 cents and a $1.25 a day.

The Democratic Party of Rappahannock County takes a position on the Second National Bank of the United States. Note the organized approach to the meeting.Courtesy of the Library of Congress
The Democratic Party of Rappahannock County takes a position on the Second National Bank of the United States. Note the organized approach to the meeting.

They grew crops or made products. They dealt with people face-to-face and paid for things with silver or gold coins or by bartering for their needs. Jackson believed such people were inherently wise, good and virtuous — and not crafty schemers.

Jackson had little use for crafty schemers who formed corporations, with charters that magnified their power, that allowed them to pool their money to make more money, to manipulate individuals or groups, to destroy competitors and control human and natural resources. Such people loved money. And money meant power, particularly political power.

That’s why Jackson was so firmly against any government run by those who owned great property. He was for the common man. He did not trust the speculator, the monopolist, the “stock jobber” who bought stock and flipped it for greater profit,or the banker who spent his time inventing crafty ways to make the rich richer and the poor poorer.

They were the moneyed aristocracy. They and their lawyers, business cohorts and financial types spoke languages that ordinary people did not understand. Jackson knew they believed they were entitled to be running things, with an ever-expanding government suited to their own needs and wishes.

Although Jackson lost his presidency bid in 1824, he came back strong in 1828, when the electorate had finally tired of the boom-and-bust economies of the National Republicans. They backed Jackson’s Democratic Party by a large majority.

Jackson believed government should be constantly receiving its instructions from the majority, so when he won his second term, he felt he had a direct mandate from the people to carry out his plans — one of which was to complete the destruction of the Second National Bank of the United States.

Paper money? Not for Jackson

Jackson, along with many others, did not believe in banks and their paper money. The Constitution gave power to the government “to coin money and regulate the value thereof.” Jackson supported this hard money policy, based on silver and gold coins created by the U.S. Mint in Philadelphia. There was nothing in the Constitution on establishing a national bank, or printing paper money.

But Congress had created the First National Bank of the United States, running from 1797 to 1811, based on the principle of implied powers, covered by the Constitution’s “Necessary and Proper Clause,” which stated:

“The Congress shall have power . . . to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.”

Based on this concept, Congress created the Second National Bank of the United States (BUS), which ran from 1817 to 1836. Jackson despised it, believing the BUS was not only unconstitutional, but, as a private corporation chartered by Congress and based in Philadelphia, was the means by which the rich controlled the government.

He claimed it was neither accountable to the government nor to the people, so when Congress re-chartered the BUS on July 2, 1832, Jackson vetoed the bill. His message back to Congress gave his objections and questioned the “necessary and proper powers” of the bank and its exemptions. “There are no necessary evils in government. Its evils exist only in its abuses,” he noted. His subsequent victory in the presidential election of 1832 proved the people supported his veto decision.

But the BUS had until 1836 before its charter expired, and under its president, Nicholas Biddle, it was going to fight by pressuring Congress for a new charter. When it was originally chartered in 1816 as a private corporation, the government agreed to deposit all its revenues from custom houses, land offices, post offices, receivers of internal revenue, Marshals, clerks of courts and more into BUS vaults. Government withdrawals covered government expenses and helped pay down the national debt. The government also had five members on the 20-member BUS board.

There were, of course, other banks in the United States. Chartered by the states, they printed their own paper money. Quite a few of these banks were of a dubious nature. In some instances, the BUS didn’t even accept their paper money, demanding silver or gold coins instead.

Then there were the counterfeiters — extremely talented artists who could engrave imitation paper money or alter existing paper money. There was even a publication, “Sylvester’s Bank Note and Exchange Manual,” describing various counterfeit bills. For January 1833, the manual listed only five successfully operating banks in Virginia, while there were three insolvent and fraudulent institutions. In the list of counterfeit and altered banknotes, Virginia had a full page listing 54 such notes.

“Bicknell’s Commercial Detector” served the same purpose. Counterfeiters, of course, counterattacked, printing a counterfeit issue of the “Detector.” In it, swindlers listed their fraudulent institutions as being good and solvent banks.

Did Rappahannock County handle paper money? Apparently so, as the newly formed government had some. There was a court case on Jan. 16, 1834, where an individual was charged with stealing $320, including banknotes, from the county clerk’s office.

By and large, though, the people of Rappahannock County made use of the barter system, a system still in use today within the memory of certain county residents. You took eggs, say, to the Corner Store in Sperryville and received maybe bread in exchange.

Jackson destroys the BUS

In his annual messages to Congress, Jackson had repeatedly asked it to make modifications to the BUS to satisfy his objections to the bank’s unconstitutional powers and privileges, its subversion of the rights of states and its dangers to the liberties of the people. But the moneyed aristocracy in Congress liked the BUS: it supported them and they, in turn, supported the bank’s interests. Thus, Jackson’s plan, evolving from about January of 1833 onward, was to completely sever the government’s finances from the BUS.

He would shift government’s deposits to state banks, sell the government’s bank shares and pay off the national debt, which the BUS was servicing. He and his party would later eliminate all paper money under $20 bills, make gold and silver coins, which had true value, the currency for the common man, accept only gold and silver in the sale of public lands, and, finally, set up an independent treasury and sub-treasuries, using only gold and silver for government finances. The total separation of government finances and the banks would then be complete.

While this plan was brewing, the people in Rappahannock County must certainly have been following national affairs, such as the physical attack on Jackson on May 6, 1833, by a disgruntled Naval officer whom Jackson had dismissed from the Navy in April of 1833. It was the first time someone had tried to physically harm a president.

Locally, the county commissioners were dealing with a May 19 recommendation on where to site the county seat: near Washington. Meanwhile, many followed Jackson’s triumphant trip through the northern states from June 6-July 4, where he was celebrated with parades, galas and dinners — to the point of physical exhaustion.

A few weeks later, Jackson left Washington, D.C. on the steamboat “Columbia” for a visit to Rip Raps, Va., near the mouth of the Chesapeake Bay, to swim and relax — and continue working on his plan to remove the deposits from the BUS. There, he received a report from the government’s directors on the BUS Board, noting “mal-administration” at the bank.

During his vacation, a supporter of his deposit removal plan had made arrangements for certain state banks (“pet” banks) to receive the deposits. Ready to remove the deposits, Jackson briefed his cabinet on Sept. 18, with the paper he had drafted at Rip Raps. It was published in the Jacksonian newspaper, The Globe, on Sept. 20.

But Jackson had trouble with his then-Secretary of the Treasury, who would not remove the BUS deposits; Jackson fired him on Sept. 23 and brought in Roger B. Taney, a strong supporter, to replace him. He could do this as it was still between sessions of Congress. Jackson’s target date to start the removal of the deposits from the BUS was Oct. 1.

Interestingly, the Democratic Party in Rappahannock County took a different position on the whole issue, preparing a resolution on the matter on Sept. 2, which was later published in the National Intelligencer in Washington, D.C.. The county’s Democratic Party backed the BUS and wanted Congress to renew its charter with suitable modifications.

Biddle struck back in November of 1833 by calling in loans and tightening credit — to such an extent that there was fear of the bankruptcy of the business sector of the nation. Delegations of businessmen traveled to Washington, D.C., to meet with Jackson on the crisis, but Jackson always referred them to Biddle. “Go to Nicholas Biddle. We have no money here, gentlemen. Biddle has all the money.”

Biddle ultimately overplayed his hand and through the winter and spring of 1833-1834, businessmen realized the power of the BUS under one man and the impact it could have on the nation’s economy. On April 4, 1834, the House of Representatives voted the bank “not to be rechartered” and that the state banks should keep the federal deposits.

Unfortunately, as more state banks were chartered, each printed more paper money, leading to all manner of speculation. Prices rose, imports increased, revenue from the sale of public lands led to more inflation, and finally, becoming leary of paper money, people started asking for silver and gold coin in its stead. On May 10, 1837, New York banks suspended payments in gold and silver. This triggered the Panic of 1837, and a Depression that lasted for seven years.

Politically, two years later, in April 1835, after three days of voting in Rappahannock County, there was a majority of 51 for the Jackson-Van Buren ticket, but a letter to the press noted, “the most violent effort made in this county by the Aristocrats and Federalists, and those who impudently called themselves Whigs,” reduced the majority to 25.

The county supported Jackson’s Democratic Party in 1836, but shifted to the Whig/Republican Party in 1840, 1844 and 1848, before reverting back to the Democratic Party in 1852. The party votes were always close, though — generally only 3- to 14-percent apart. On a final note, Jackson paid off the National Debt in 1835, something never done before or since.

Print Friendly, PDF & Email
Don Audette
About Don Audette 22 Articles
Don Audette has a place in Sperryville, is a longtime member of the Rappahannock Lions and writes about local history in his "Yesterdays" column for the Rappahannock News.