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The First Bank of the United States was established at the direction of Treasury Secretary Alexander Hamilton in 1791. Hamilton supported the foundation of a national bank because he believed that it would increase the authority and influence of the federal government, effectively manage trade and commerce, strengthen the national defense, and pay the debt.
[1] [2] The lack of a central bank to regulate fiscal matters, which President Andrew Jackson had ensured by not extending the charter of the Second Bank of the United States, was also key. The ailing economy of early 1837 led investors to panic, and a bank run ensued, giving the crisis its name. The bank run came to a head on May 10, 1837 ...
The Bank demanded that private and state-chartered commercial banks, many of which had loaned excessively and previously served as fiscal agents during the War of 1812, now pay the Second Bank in specie, which was then sent to Europe to pay the federal government's creditors.
The efforts to renew the bank's charter put the institution at the center of the general election of 1832, in which the bank's president Nicholas Biddle and pro-bank National Republicans led by Henry Clay clashed with the "hard-money" [14] [15] Andrew Jackson administration and eastern banking interests in the Bank War.
Biddle's application set off the "Bank War"; Congress passed a bill to renew the national bank's charter, but Jackson vetoed it, holding the bank to be unconstitutional. [141] Clay had initially hoped that the national bank re-charter would work to his advantage, but Jackson's allies seized on the issue, redefining the 1832 election as a choice ...
Upon Van Buren's return from Europe in July 1832, he became involved in the Bank War, a struggle over the renewal of the charter of the Second Bank of the United States. [ 126 ] Van Buren had long been distrustful of banks, and he viewed the bank as an extension of the Hamiltonian economic program, so he supported Jackson's veto of the bank's ...
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In 1829, in his first annual message to the United States Congress, Jackson criticized the bank. Jackson believed that the bank was unconstitutional and worried about its centralization of financial influence. [7] He believed it favored the elites over farmers and laborers. In 1832, he successfully vetoed a bill to recharter the bank. [8]