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Jackson and Clay

October 9, 2018

Bank president Nicholas Biddle had reason to believe President Jackson would support the Bank of the United States (B.U.S.).  Jackson had railed against the “printing press banks” of the West.  Since the B.U.S. was doing its best to curb inflation, it was logical to anticipate Jackson’s support.  But Jackson was more concerned with the ethical operation of the B.U.S. than with the results it produced for the economy.

When taxes were collected, the Federal government deposited the funds into the B.U.S. but collected no interest.  Meanwhile, wealthy shareholders of the B.U.S. were reaping profits that might have gone to the U.S. Treasury.  Jackson rightly viewed this as subsidizing the rich at the expense of the common people.  He hoped to replace the B.U.S. with a banking system which would benefit everyone while still curbing inflation.  One of the experts on his team was James Alexander Hamilton, son of the Treasury Secretary who had devised the 1st B.U.S. in 1791.  Despite his pedigree, Hamilton was unable to design a replacement system that permitted no unintended consequences.

Realizing the futility of Jackson’s task, Henry Clay seized the moment.  Although the B.U.S. charter would not expire until 1836, Clay convinced Biddle to seek renewal in 1831.  If Jackson signed rechartering legislation, Clay’s agenda would be advanced, but if Jackson were to veto, Clay would get a campaign issue in 1832.

Jackson resented Clay’s attempt to maneuver him into violating his political conscience, and he was especially not going to advance Henry Clay’s agenda.  For the last half dozen years he and Clay had been bitter enemies.

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