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

Clay’s Objectives in Settling the Nullification Crisis

This is post number five in a sub-series detailing Southern Whiggery. See the sidebar for earlier posts.

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I give some thought to Henry Clay from time to time, the great compromiser, “America’s greatest senator.” What I see is a man with little or no interest in history and even less understanding of it or, at least, the consequences of ignoring it, who made a career fomenting crises, then jumping in before the shooting started and winning glory for quelling the actions of “mad men”, thus averting the near disasters he was instrumental in creating. 

With the South Carolina Ordnance of Nullification, the Jackson administration had two months to come up with a plan to address the Carolinians’ grievances, either by reforming the tariff or by taking military action against the state. Now, I don’t know if those were the only options, but they were the ones being looked at. Despite the bluster that accompanied Jackson’s threatening Proclamation to the People of South Carolina on 10 December 1832, Jackson did embark on a fix by drawing up a reform tariff that only a Democrat could possibly love (I’m speaking tongue-in-cheek). That task was assigned to Gulian Verplanck a four-term Democratic congressman from New York and a member of Van Buren’s camp. Verplanck was a devoted free-trader and the new chair of the House Ways and Means Committee. What he came up with was a tariff bill designed to rid the treasury of its surplus and return the tariff to the original 1816 level—the post-War-of-1812 tariff passed to protect the young Republic from designs Britain (or any European power for that matter), still had on what now belonged to the United States. Twelve years later, that tariff had mushroomed into the protective Tariff of Abominations behind which Northern industry sat fat and getting fatter while the rest of the nation, in particularly the vocal South, suffered the price. 

Touted as the Administration’s offer, the Verplanck Bill was actually Van Buren’s Bill, and I do believe the verdict is still out as to whether or not Jackson wanted it to pass, but rumor was he didn’t. Given his nationalist leanings that was probably the case. South Carolina’s representative on this matter was her senator, John C. Calhoun, who had personal as well as professional conflicts with both Jackson and Van Buren. Supporters of the American System, of course, spurned the bill. Under it, protection for American industry would have been withdrawn within two years. Leading Southerners such as Littleton Tazewell and John Tyler of Virginia, and Robert Hayne of South Carolina, all opposed to the protective tariff, had for years suggested a gradual reduction in the tariff as a concession to Northern manufacturers (who, it should be remembered, felt the tariff was the patriotic duty of the rest of the nation—and the South dared “offer a concession” in the process of eliminating it? Why the very nerve!). No such option was being offered here. National Republicans feeding off the American System never wanted protection to end and weren’t the least bit interested in sacrificing their interests to appease South Carolina. 

Henry Clay, despondent over his electoral defeat in 1832, initially displayed only fleeting interest in the crisis, but once confronted with the Verplanck Bill, he was faced with the stark reality of saving the Union by sacrificing the American System—that’s really the choice the Verplanck Bill offered. As representatives of the New England/Pennsylvania manufacturers were gearing up to do battle against the Verplanck Bill (early winter of 1833), Clay introduced a compromise tariff bill that called for the gradual reduction in the protective tariff over a period of seven years, at the end of which the tariff would be reduced to revenue only and protection ended. Clay argued that after seven years, businesses should be able to hold their own. Needless to say, Massachusetts’ Daniel Webster and the interests he served were appalled at the thought of ending protection and still more so at Clay’s apparent betrayal of the system he had so strongly supported. They would never willingly abandon protection. Clay countered, apologizing that in reality nothing could bind Congress seven years down the road.

Clay’s excuse speaks volumes. This was why strict construction/limiting the Federal government to its delegated responsibilities was so important. Once the precedent was set, proponents saw no limit to the tariff’s possibilities until South Carolina challenged its constitutionality. Reading Clay’s words, it’s obvious he intended the compromise to be temporary, designed only to meet current exigencies. Once the climate calmed, the National Republicans could again raise the issue of the protective tariff.  

Webster, seeking his own leadership role among the National Republicans, now balked at Clay’s leadership and forsook the compromise, twisting support for the tariff as patriotism and in accordance with the Constitution. For Webster and other radical National Republicans (probably those with Federalist blood flowing through their veins), abandoning protection was tantamount to treason.  

Given Webster and New England’s reaction to the plan, Clay shelved it, and the House began debate on the Verplanck/Van Buren Bill knowing it would not get out of the Senate, even if it did make it out of the House. By now it was January, and the nullifiers in South Carolina were calling for secession if Jackson dared to defy their Ordinance of Nullification. Secession was a more extreme measure than what Calhoun anticipated, his goal being to prove “interposition” a viable recourse for a state when faced with federal overreach. Along the periphery, folks were starting to believe Jackson might take military action against South Carolina, and politically, given Jackson’s nationalism and aggressive stance toward a sovereign state, a growing rift was fracturing the Democratic Party across the South.  

Webster’s ambitions were well-served by the crisis. Within the National Republican Party, Clay had Webster checked, but Webster was not above changing affiliations. At Jackson’s request, Edward Livingston, his secretary of state, approached the Massachusetts Senator for help in framing the Force Bill. Webster complied. Calhoun referred to Webster’s Force Bill as the Revenue Collection Bill, a bill to make war on a sovereign state. For Calhoun, the issue was a theoretical one—what the central government could and could not do under the Constitution. The Senate majority, seriously lacking in theorists, placed little merit on the theoretical. The Force Bill passed. 

Now here’s the question: With the Force Bill passed and the Verplanck Bill on the verge of defeat, why did Henry Clay waltz in again with yet another compromise designed to be acceptable to the administration, to South Carolina and with, at least, a chance of making it through Congress? In The Great Triumvirate Merrill Patterson suggests he acted out of fear for the American System at the hands of the Jackson administration. That, yes, but I think in the wake of his disastrous showing in the 1832 election, Clay realized he needed Southern electoral support. Certainly the Southern Democrats accused him of that course as did the New England manufacturers, so mine is not an original thought. Another point was that Clay suspected South Carolina preferred anyone but Jackson get credit for the compromise; likewise, Webster believed Clay would come up with anything to get credit for the settlement of the crisis. When Clay approached Calhoun, the latter jumped at the hope of resolving the crisis.  

Clay’s new plan was the same basic one he’d offered back in January (it was mid-February by then, and Congress was scheduled to adjourn the first week of March). The current plan took the Tariff of 1832, with major modifications, and tacked on a gradual reduction, down to the revenue level, over a period of nine and a half years (to 1 January 1842) at which time it was to revert to a revenue-only tariff with the understanding the rate could change depending on the needs of the government (not private industry). Proponents of the American System accused Clay of abandoning the economic program he had created. Clay countered that nullification was not the threat to the American System, Jackson was. 

Clay argued, as he had a month earlier, that in nine plus years the manufacturers should be able to stand alone without the aid of government—and hinted again that a lot could happen over almost ten years—how does one hold Congress to an agreement made almost a decade earlier? Clay was merely pushing the issue down the road to relieve the immediate crisis. With the protective tariff, a precedent had been set and would be forever abused. Clay argued that for the next near decade the North would have its protection and the South would faithfully do its duty believing the end of the thing was in sight.

In debate, Clay challenged Webster’s writing the Force Bill to wage a bloody war against the people of South Carolina, yet was now unwilling to offer this compromise to accompany the threat and return the nation to peace and stability? To Webster and his constituents in the Northeast, the compromise tariff neutered the Force Bill and surrendered protection under intimidation. Despite Webster’s protest, the package passed, and the Enforcement Bill and the Compromise Bill went out together.  

Calhoun rushed home to South Carolina where the compromise was considered a victory. [And I guess it was...something gained—a distant light at the end of a long, long tunnel, perhaps? Certainly Calhoun had shown “nullification” could get a reaction, if nothing else. The settlement of the affair puts me in mind of Mao Tse-tung’s adage of “two steps forward (for proponents of the American System) and one step back.”] The South Carolina legislature repealed its Ordinance of Nullification, then a few days later declared the Enforcement Bill null and void. The latter was a matter of necessity. No matter how one cut it, the Force Bill implied the central government could, at its discretion, interfere in sovereign states on matters outside the scope of its limited powers.  

Meanwhile back in Washington, Clay’s hopes for Jackson’s “alienation” again failed to bear fruit, because the state righters who broke with Jackson did not rally to the National Republican cause. (You know, those same National Republicans some members of which had just concocted the Force Bill calling for the invasion of South Carolina by Federal troops? Oh, duh.)  

Still, something significant had occurred. When Congress reconvened in December of 1833, six Southern senators had defected the Jackson camp and now identified themselves as independents. In addition, South Carolina sent two nullifiers. The make-up of the Senate stood at twenty National Republicans, twenty Jacksonians, and those eight independents, who held the balance of power in the U.S. Senate.  

And they all had another executive crisis to deal with. Next time.

Thanks for reading,

Charlsie

Jacksonian Democracy, the National Republicans, and the American System

This is my third in a sub-series detailing Southern Whiggery. See the sidebar for earlier posts. 

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In his singular study Whig Party in the South (1913), historian Arthur Charles Cole outlined five stages of development of the Party in the South from its birth in the 1830s to its demise after its disappointing performance in the 1852 election. First and foremost, Cole stated unequivocally that the Whigs evolved from a disaffected group of Jacksonians turned anti-Jacksonians, the direct result of Andrew Jackson’s reaction to John C. Calhoon’s Nullification of the Tariff of 1832. Though not “nullifiers” per se—indeed, most of these men adamantly opposed the concept as well as Calhoun’s tactic—these state-rights leaders abandoned the Jackson camp in the wake of Jackson’s threatened military action against the state of South Carolina. Their numbers reflected a fair proportion of the South’s planting class. Briefly, for the sake of future reference, the other four stages were the Southern Whigs’ acceptance of Clay’s American System, realized by the year 1844; after 1844, a period of cautious interaction with their Northern counterparts, the result of the slavery issue; a growing rift between not only Southern and Northern Whigs, but increased distrust by the Party’s Southern constituents given the Northern faction’s reaction to abolitionism, making the Party an unfit champion for Southern interests; the demise of the National Party following the disastrous election of 1852; and an attempt to revive the Party on the part of the South until the War Between the States swept all pretense aside. I argue that there is yet another stage, that being during Reconstruction and Redemption.  

In my last post I referenced Henry Clay’s need for a cause strong enough to wrest the hearts and minds of the American people from the popular Andrew Jackson. Two highly charged issues, one the National Bank, the second the Nullification Crisis—the two intricately linked by the American System—partially filled Clay’s need. 

The American System, so named by its chief partisan, Clay, and the very essence of the National Republican platform, was a government-assisted economic program the roots of which go back to our first Secretary of the Treasury, Alexander Hamilton. Nationalistic in concept, it is characterized by:

(1) a high protective tariff, initially put into effect to protect burgeoning American industry...

Okay, belay that. Initially it was put into place, with Southern support, in 1816 to protect and strengthen this young nation’s security against Britain following the War of 1812. Lasting peace with mother England arrived in the short-term, then came the argument to protect America’s infant manufacturers. Try as those manufacturers could to deny it [okay, this is me talking], their infant could remain an infant only so long, so the pro-tariff argument again morphed, this time into the protection of “American labor” [yeah, right, more like those who employed the labor]. The Tariff of 1816 didn’t go away; in fact, tariffs kept getting more protective.

(2) A national bank supported by investments from the Federal government and private investors, its purpose to stabilize the currency and reign in risky state banks; and

(3) Federal subsidies for internal improvements, primarily roads and canals meant to link the nation and foster industry as well as security.  

They all sound great, don’t they? We have them today and much, much more. One problem, though: such programs can’t be managed (then as now) without centralization. Popular in New England and Pennsylvania and even the Midwest where industry/manufacturing blossomed, The American System was out of sync with the Founder’s federalism. Strict constructionists/state righters, residing mostly in the South, knew it. State righters, astute victims of the protective tariff, understood the reason the Founders went to the lengths they did in framing the Constitution to prevent such shenanigans, and were aware of the Anti-Federalists pre-ratification warnings as to why the Constitution wouldn’t. This brings us back full circle to the Old-Jeffersonian concerns about the nation’s direction in the wake of the War of 1812. The American System opened the door to Federal interference in the states as well as to political corruption. It was, as those old Jeffersonians of the day repeatedly warned, a looming threat to our [now] long-lost Federal Republic. 

The matter of the Second National Bank, key to the American System, can be divided into two events, one being Jackson’s veto of its re-charter in 1832 followed one year later by his removal of government deposits from the Bank. Event one, I will relate here. Though an obvious attack on the American System, Jackson’s veto was within his purview and constitutional; the removal of the deposits, far more egregious, I will detail in a future post.  

Riding high on the wave of good feeling that accompanied Jackson’s re-election in 1832 and very much aware that Andrew Jackson was no friend of the National Bank, Nicholas Biddle, the Bank’s president, decided the time was favorable to present the Bank’s re-charter to the president, despite the charter’s not expiring for another two years. Considering the popularity of the bank in the Northeast and among the rich planters in many Southern states, Biddle was certain Jackson would not dare veto the measure whereas two years down the road he might. Henry Clay, a bitter foe of Jackson, and Daniel Webster of Massachusetts encouraged Biddle’s decision for early re-charter because they were certain Jackson would veto it, and they were desperate for any conflict that might decrease Jackson’s popularity with the people. Given Jackson’s antagonism to the banking elite, Clay considered the man and his administration a threat to the American System.  

As Clay and Webster anticipated, Jackson declared the Bank outside the scope of national authority and unconstitutional. He vetoed the bill, foiling Biddle. In North Carolina, W. R. Hinton, a Jackson elector, ceased to back Jackson after the veto, but despite protests such as that presented by Hinton and others belonging to the wealthy banking elite, Jackson had foiled Clay and Webster as well. The common folk, regarding the bank a corrupt engine of aristocratic privilege, did not protest the veto, and the National Republicans did not have the votes to override it. The National Republicans had lost the National Bank, a serious blow to the “American System,” and they had nothing to show for it.  

On the subject of the National Republicans’ economic agenda, the American System was about to receive yet another challenge.  

An introduction to the Nullification Crisis next time and thanks for reading,

Charlsie