Transcript Chief Guardian of Economy

Chief Guardian of Economy
GEORGE WASHINGTON
AND
ANDREW JACKSON
George Washington and the Bank
 Washington (1st President) – took office in 1789,
served for 2 years
 Precedent: Act or decision that sets an example for
others to follow.
 Precedent = CABINET – advisors to help the
President run the country

Today there are 15 departments in the Presidential cabinet
 Washington appointed Alexander Hamilton to be
Secretary of the Treasury
George Washington and the Bank
 Hamilton faced a huge national debt
 During Revolution, the government had borrowed
from foreign countries and citizens to pay soldiers
and buy supplies.
 Government issued bonds:
 A certificate that promises to repay the money loaned, plus
interest, by a certain date
George Washington and the Bank
 Hamilton wanted to pay off the debt in full but some
Southern states did not agree that the government
should help states with debt from the war
 Compromise:

Capital city would be established between MD and VA =
Washington D.C. IF the Southern states agreed that Congress
could pay off state debts.
George Washington and the Bank
 Next, Hamilton needed to strengthen the economy:
agriculture and industry
 Called on Congress to set up a National Bank in 1791
 Government would deposit $ from taxes in Bank,
Bank would issue paper money to pay gov’t bills, and
make loans to farmers and businesses
George Washington and the Bank
 WAIT!!! Does Congress have the power to create a
National Bank under the Constitution?
 Was Washington acting as a strong or weak
President?
 How would you evaluate Washington’s role as Chief
Guardian of the Economy?
Andrew Jackson and the Bank War
 Andrew Jackson (7th president, 1829-2837),
 first westerner in White House,
 represented common man,
 nicknamed Old Hickory
Jackson and the Bank War
 Bank of the United States
 Controlled loans made by state banks – could limit the amount
that state banks could lend out
 Created by Congress but controlled by private bankers
 Nicholas Biddle – President of the Bank – came from a rich
family and was vain and arrogant
Jackson and the Bank War
 Jackson, like many Democrats, did not like the Bank.
 Felt it was undemocratic….private bankers running the bank
got rich off of public funds
 Jackson especially disliked Biddle and felt he used the Bank to
benefit the rich
 Biddle and other Whigs (the other main political
party at the time) planned to use the Bank to prevent
Jackson from being reelected.
 Tried to renew the charter for the Bank in 1832 –
reelection year, instead of 1836
Jackson and the Bank War
 Jackson was sick in bed when he heard about the
plan to renew the charter and said, “The Bank is
trying to kill me, but I will kill it!”
 Jackson vetoed the Bank bill



Unconstitutional
Bank helped rich at the expense of the common man
“When the laws undertake to make the rich richer…the humble
members of society – the farmers, mechanics and laborers –
….have a right to complain of the injustice to their
government.”
Jackson and the Bank War
 Whigs hoped the veto would undermine Jackson’s
reelection bid and nominated Henry Clay to run
against Jackson.
 Jackson won by a landslide – people rejected the
Bank too!
Jackson and Bank War
 Bank was forced to close early – Jackson wouldn’t
wait until 1836 when charter expired



Ordered Sec. of Treasury Roger Taney to stop depositing
federal money in Bank
Federal money was put into state banks – “pet banks”
Bank closed but led to an economic crisis of 1837 because state
banks could now lend without limit – and they did!
Jackson and the Bank War
 In what ways did Jackson exercise his role as Chief
Guardian of the Economy?
 Was Jackson acting as a strong or weak President?
 Should Jackson be held responsible for the Panic of
1837?