Jackson’s Removal of the Deposits from the Second National Bank and the Hijacking of Southern Whiggery

This is post number six in a series detailing Southern Whiggery. This post continues with the year 1833, the year of the Nullification Crisis, the removal of the government deposits from the Second National Bank of the United States, and the birth of the Whig Party. See the sidebar for earlier posts. 

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The senate adjourned on the 2nd of March 1833, the same day it passed both the Compromise Tariff of 1833 and the Force Bill, the former effectively canceling the need for the latter and averting Federal action against South Carolina. Henry Clay’s effort to make a bloodless end to the Nullification Crisis had placed this devout nationalist in the state-rights camp. I doubt that’s where he wanted to be for the long term, but I’m not so sure how he felt being there at that moment. Clay was in search of Southern support—and that was for the long haul.  

The Nullification Crisis had also fed the ambition of Daniel Webster, who now saw himself as a champion of the Union (that would be the Northern concept of Union, the nationalists’ Union, the gimmick through which he advanced the interests of his New England constituents) in opposition to the subversive South, which aimed to triumph over the American System and to blow up a storm over the slavery issue. Now, that last is a paraphrase of Webster’s own words. It’s not clear to me what the man was thinking—he may have been referring to the issue of slavery in the territories or the South’s raising a ruckus over the repeated unrestrained abuses perpetrated by abolitionists. Maybe both, but odds were the South wouldn’t have been making an issue over slavery unless someone else had brought it up first.  

Then in September of that same stress-filled year (clearly the president considered his re-election a mandate), Andrew Jackson removed the federal deposits from Nicholas Biddle’s Second National Bank of the United States with plans to disburse those assets to state banks.

[I tried to find out what physically happened to the money—did government agents actually march into the bank in Philadelphia, make a huge withdrawal, and move specie to a treasury vault in Washington? It’s all rather murky, but as I understand it, what Jackson actually did was direct the government to use its deposits in the Second National Bank for operating expenses while at the same time to cease making deposits to the bank, so that within a short time, Biddle’s bank had more banknotes circulating than it had specie to cover them. If anyone reading this knows the particulars, I’d love for you to comment.]

Jackson did this while Congress was adjourned, and no matter how one feels about the national bank and its patron “American System,” Jackson’s action was a usurpation of Congressional power, and don’t forget that no matter how arrogant we allow Congress to become or how worthless our representatives prove, they still represent the people of the United States. The executive tasked to carry out the laws they promulgate should respect that. He has veto power, and the people’s representatives have override.

Jackson’s move didn’t come out of the blue...well, kinda, maybe, sorta. The National Republicans had expected him to try something. During his annual report to Congress that past December, Jackson had referenced the Bank of the United States as an unsafe repository for America’s money, and he’d earlier requested the government sell its extensive bank stock, but Congress denied the request. In September 1833, with his trusted advisors, Post Master General Amos Kendall and Francis Blair watching approvingly, Andrew Jackson removed his disapproving Secretary of the Treasury, William Duane, and replaced him with his more amenable attorney general, Roger Taney. Taney had, in fact, drafted the lion’s share of Jackson’s bill vetoing the bank’s re-charter. Taney dubbed the National Bank an unfit habitat for the people’s money, citing as misconduct: political partisanship, the denial of information to government-appointed directors, monolithic financial power, and the inherent corruption of the democratic principles of the Republic. With that justification, he...um,  “reallocated” let’s say, the use of government deposits. At the same time, Jackson dispatched Kendall to find safe repositories for the government’s money in private banks.  

In his December 1833 report to Congress, Jackson explained that the Bank of the United States interfered in politics to the point it had become a veritable electioneering machine. It made loans to influence legislation, and at that very moment, Nicholas Biddle was out there fomenting a vindictive financial crisis proving that the nation’s finances should not be at his mercy. Actually, Biddle had instigated the financial crisis by contraction and calling in loans that past summer in the wake of Jackson’s veto of the Bank’s re-charter.  

When challenged to provide the authority by which the Secretary of the Treasury had usurped a Congressional prerogative, Taney responded to Congress that, according to the charter, if Treasury deemed removal of the deposits necessary and Congress was not sitting, the treasury secretary was to take action and inform the Congress as soon as possible upon its reassembling. That’s what he was doing now, informing Congress. [Just as an aside, Congress turned around and told this Jackson “appointee”  to Secretary of Treasury they hoped he enjoyed his short-lived reign, because they weren’t approving him as secretary (okay, it didn’t play out exactly that way—I embellished it a bit). Jackson eventually took care of him, though, nominating him to fill the deceased John Marshall’s chair, Taney became the fifth Chief Justice of the United States Supreme Court].

Suffice it to say there was much ado concerning not only the manner in which the removal of the deposits was carried out, but also about the contemporary damage then being done to the nation’s economy. Clay insisted the deposits were safe, Jackson that the institution posed a danger to the Republic and again alluded to Biddle’s self-made financial crisis affecting the nation. [Actually, I believe Clay and Jackson may have been talking apples and oranges here.] Impeachment would have been the proper recourse for Jackson’s perceived overreach, but it was out of the question given the Democrats had the House, so Henry Clay opted for a senatorial censure of Jackson to be entered in the Senate Journal. A majority of the senators agreed, and it was done. Several years later, Thomas Hart Benton, the long-lived Democratic senator from Missouri, got it expunged.

Volumes have been written on the Bank War, and it’s not the purpose of this series of posts to detail events, but rather to provide the reader an overview under which the Whig Party came into being. So, where is the Whig Party in all of this? Let’s start with the anti-Jacksonians. As of December 1833, they consisted of :

(1) The National Republicans, proponents of the American System

(2) Calhoun’s Nullifiers

(3) State righters who abhorred the National Republicans economic agenda, but who were opposed to nullification (see my Clay’s Objectives in Settling the Nullification Crisis).

It was Clay, determined to organize an anti-Jackson coalition, who took charge of this hodge-podge in the early winter of 1833-1834. Webster would remain absent until Jackson’s dispensation of the deposits from the National Bank went through in late January. [Recall Webster deserted Clay and entered the Jackson camp during the Nullification Crisis and was Jackson’s hammer behind the Force Bill] Then, his hopes having proved futile, he returned to the Clay camp. Jackson may have had control of the House, but as stated in my last post, the Senate was up for grabs: The Senate of the 23rd Congress of the United States comprised 20 Jacksonian Democrats, 20 National Republicans and eight independent Southern senators, six who had departed the Jackson camp after the Nullification Crisis and South Carolina’s two nullifiers. With those eight, the anti-Jacksonians seized control of the Senate Committees in mid-December 1833. It is from this point that Professor Michael Holt (Rise and Fall of the American Whig Party) dates the party’s birth. [Cole, The Whig Party in the South, dates it to the spring of 1834. More on that later.] 

In the early winter of 1833-1834, Clay knew it would be his (new) allies in the South—represented by those eight independent Senators who had broken with Jackson and who had little use for the National Republicans—who would prove his vanguard in rescuing the government and public liberty from Andrew Jackson. But Clay wanted more from the South. With the poignant sense of history (sadly a subject Clay had little interest in) the new party kept the name the South Carolinians had revived during the Nullification Crisis and the “Whig” Party became the umbrella under which could gather all those opposed to Jackson and (a short time later) Van Buren and their effort to concentrate power under the executive branch [as opposed to the National Republican effort to concentrate government power in the hands of bankers and the manufacturing elite]. The irony is Calhoun and his South Carolinians never embraced the “Whig Party,” but remained independent (Forever nullifiers. You rock, South Carolina!)

But, back to the point, what I’m seeing is a principle dealing with the abuse of executive power against the legislative branch (the people’s representatives); therefore, the abuse was translated by those representatives as abuse against liberty. But Clay fell short of the beliefs held by his allies in the South, whose focus was on state rights. This was, and albeit this is me talking here, the keystone of our federal system. The division of powers between the three branches of the Federal government was to balance power between the executive, the legislative, and the judicial branches of the central government and nothing more. That division/separation had nothing to do with state rights and the threat that the executive/central government made against the state of South Carolina and her elected leaders, yet it was the state-rights issue that gave birth to the Whig Party and nominally gave Clay his Southern supporters. Once the Federal government—and its three branches—were in charge, superior to the states, as is the case today, who was going to rescue liberty from the government? Congress always had the tool to rein Jackson in: Impeachment. The House, held by his own Jacksonians, refused to bring the man to trial. The states had their sovereignty in all matters except the limited ones delegated to the central government.

The choice of the Southern name rather than the continuation of “National Republican” for the new party says a lot about what Clay had done. He’d pulled off a coup is what he did. He and his cohorts infiltrated a band of strict-constructionist state righters, took their name, gave lip-service to their republican principles, and housed their anti-republican American System there. If only the South and West had chosen, at that point, to stand alone.  

How, one asks, could this work? Well, I’m not convinced that it did...ever. Nevertheless, the Whig party did come into existence and the South played a big role within it. More importantly it played a big role in the South, one that’s never really, in my opinion, been done justice. Like so many things dealing with the South, her role in the foundation of the Whig Party and the founding principles to which the Southern faction devoted itself have been marginalized, leaving the primarily Northern National Republicans and their anti-republican American System representative of the Party’s principles. The result leaves the Southern Whig smelling worse, perhaps, than he should. I’ll continue with Southern Whiggery next time.

Thanks for reading,

Charlsie