The Pete Quiñones Show - Episode 1372: The Road to Civil War Pt. 12 - Jackson and the Second Bank of the United States - w/ George Bagby

Episode Date: May 21, 2026

72 MinutesSafe for WorkGeorge Bagby is a content creator and publisher of long-forgotten books. George joins Pete to continue a series detailing the long lead up to America's Civil War.George's Twitter AccountGeorge's Pinned Tweet w/ Links George's YouTube ChannelPete and Thomas777 'At the Movies'Support Pete on His WebsitePete's PatreonPete's Substack Pete's SubscribestarPete's GUMROADPete's VenmoPete's Buy Me a CoffeePete on FacebookPete on TwitterBecome a supporter of this podcast: https://www.spreaker.com/podcast/the-pete-quinones-show--6071361/support.

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the audio files that you can download and listen to, or you can stream in most cases through those locations as well. So if you want to avoid the ads, consider supporting the show if not, just know none of these ads get any endorsement from me. Skip by them. Do what you need to do. I appreciate all of you. Head on over to the Pekignano Show.com. You can get the show early and ad free over there. If not, here's a show. I want to welcome everyone back to the Piquino show. George Bagby is back. How are you doing this evening, Mr. Bagby? I'm doing all right. I'm very thankful for the opportunity to be here. I am so happy to have you here. And considering what the subject is tonight, a subject

that, um, something that I think pretty much anyone who came through libertarianism is pretty well, it's pretty familiar with. Um, yeah, this is, uh, exciting times, an exciting piece of history in the country. So I'm going to hand it over to you. All right. Well, we're here tonight to talk about Jackson and the Bank of the United States and the long controversy about this particular constitutional issue coming to a head during his administration. And of course, there are inklings at the beginning of Jackson's rise to national fame and political clout that hint that this is going to come to a head at this time. But the way that Jackson seizes this problem and gives it a blow of finality is quite important.

And we've talked some time ago about the constitutional issue of the Bank of the United States, that the Constitution does not explicitly give the federal government any power to establish corporations. But this was done from Hamilton's vision, the broad interpretation of the Constitution, which has a lot of other features that are also prominent in this period. We were talking in relation to Jackson's Rise about John Quincy Adams and his administration, how Adams had a great many innovative ideas, how to use that broad interpretation to establish all sorts of other institutions, a national laboratory, basically a research university with patronage to the intelligentsia, the National Observatory,

which eventually does get established under the auspices of the War Department, mostly for the Navy. So there are some other aspects there. But Adams has these very expansive kinds of ideas about what to do with this broad interpretation of federal power. And with the Jackson administration, we see a major, major counter force to that manifest in what becomes the Democratic Party. You recall that at the time of Adams and Monroe, there is really only one party that they're all calling themselves national

Republicans. This has no relation to the Republican Party, which is of a later generation. But we see the development of two parties in this period. What becomes the Whig party headed by Henry Clay of Kentucky and the Democrats who are headed by Jackson and his allies. So when Jackson takes office, he speaks out against a large standing army. He says he proposes to cut military expenditure in a time of peace. He is an advocate of the militia as the primary institution of national defense. We should remember that this is also quite connected to the so-called old Republicans, John Randolph and John Taylor of Caroline, and that set, Nathaniel Macon of North Carolina, these old strict constructionist thinkers who had a long career.

Randolph is actually in the house during Jackson's administration. This is the last bit of his long career, but he feels quite vindicated at this point to see many of these old ideas kind of coalesce in what becomes the Democratic Party. Jackson proposes to check the abuse of the civil service, the expansion of federal offices that took place under Monroe and JQ Adams. This is a major issue in his administration. There are an awful lot of allegations in the press that is supporting Jackson. They're basically Jackson's surrogates at a time when a candidate for high office, like the presidency, did not campaign. And this remained a tradition in our electoral politics for a lot. long time. Jackson does not travel. He does not make speeches. Instead, the press that supports him,

that actually has a personal relation with the candidate, they are speaking on his behalf. And one of the things they're doing is they are making a lot of credible assertions about corruption in the civil service. There are allegations that some of these jobs are simply sinecures to award supporters that the jobs actually don't have any content or duties, that there is embezzlement going on. And indeed, there were trials and such to this effect after Jackson takes office and these things are substantiated. So these are not just empty sorts of speculations. There's also a major concern about the activity of lobbyists to expand these bureaucracies to aggrandize themselves, to increase their own political power and such. There's money and politics, of course, because there's so much power in the federal administration.

It does attract investment. And this is a concern of Jackson's supporter. During Jackson's administration, he has his official cabinet, his secretary of war, and so on, his vice president, who is John C. Calhoun in his first administration. Calhoun ends up exiting that office kind of dramatically at a later date, which we will get to by and by. But Jackson famously does not put as much stock in the advice of his cabinet members as did his predecessors. Instead, he surrounds himself with his great friends and confidants who assemble together in the White House to consult with the president to exchange their views on issues. And these are called his kitchen cabinet. And some of these actually do get appointments in the federal bureaucracy.

One famous example is one Amos Kindle, who is a journalist, a newspaper editor, also a businessman and a philanthropist. He was from Connecticut originally, I believe, but he had settled in Kentucky and ran some newspapers there. of course, they're pro-Jackson newspapers. He becomes a undersecretary of the Treasury under Jackson. He's one of Jackson's famous members of the Kitchen Cabinet. Also in there is a congressman from New York named Martin Van Buren, who, of course, succeeds Jackson in the White House, first replacing John C. Calhoun in the role of vice president

before actually running his own administration in the White House. But Amos Kindle, he becomes the auditor of the Treasury, and he replaces a corrupt auditor. This was a man who was embezzling government money, and under his new role as auditor of the Treasury, he prosecutes his predecessor. So we see certain echoes here of what Thomas Jefferson had wanted to do with the terms of turnover when the Federalists lost power at the end of John Adams' administration. You remember that Thomas Jefferson wanted not just to prosecute former Federalist officials and to deny them the patronage of government powers and prestige, but also to prosecute

federal judges, which he did attempt. He was the last president to do so. But we see certain echoes of that with the actions in Jackson's administration, the successful prosecution, for instance, of the former auditor of the U.S. Treasury, who was a corrupt man? So in 1835, just as a side note, Kindle, he becomes the postmaster general. So he actually joins the cabinet in Jackson's second term in office. And he presides over the largest branch of the civil service, the post office. And Kendall is running a real audit of the civil service in his role in the Treasury and then later in his role as postmaster general.

He is reviewing the records of the bureaucrats. He is identifying corruption or largesse, you know, unnecessary positions, wasteful government spending for these positions. And according to various historians who have tried to estimate just how many civil servants were dismissed during Jackson's administration, some say up to one in five government bureaucrats were dismissed. Others say one in seven. So they do have a span in their estimate and there's argument about this. But what no one denies is that a substantial portion of the federal bureaucracy was dismissed during Jackson's term. So now we get to the Bank of the United States. We see Jackson's initiative, his mandate for civil service reform. but he identifies the Bank of the United States early in his private correspondence as his main object for these reforms. He sees the Bank of the United States as a special instrument of patronage of a very hated financial elite,

and his constituents share his disdain for this particular class, and there are a number of reasons for this. which we'll get into. He calls the Bank of the United States a hydra-headed monster. He says that it impairs the morals of the people and that they buy members of Congress by the dozen for their lobbying efforts in the legislature. It constitutes such a powerful financial interest. It is so profitable. And it has this special charter to do business in all of the constituent states of the Union by this controversial interpretation of the Constitution, the broad powers of Hamilton's interpretation of the Constitution, that he has resolved to do away with the institution. Later on, in his veto of Congress's re-charter for the Bank of the United States, he says, it is not, in my opinion, a legitimate power of the federal government to establish this organization. Now, his enemy has taken to task over this, and they say, well, what about McCullough v. Maryland? John Marshall has already established, you know, in the Supreme Court ruling, that this is a legitimate power given to the federal government by the Constitution.

And this Jackson steadfastly demers on. He says, no, I do not agree, and it is part of my legitimate power as the president to establish the policy on this question. And he succeeds. And this is a remarkable victory for the old Republicans who have been saying this from the start and have been encouraging just this kind of action, according to their enemies, a high-handed action using the presidential veto to get rid of the Bank of the United States. But nevertheless, establishing the Jeffersonian persuasion, in fact, if not in Supreme Court case law, it is established. And Jackson's destruction of the Bank of the United States is a lasting legacy of his administration because it is not set up again. We have to wait until

the administration of Abraham Lincoln before we see federal chartered corporations once again. So this is a lasting change. Jackson writes in a private letter, The bank is trying to kill me, but I will kill it. I recall, and I was not able to find, but I recall a remarkable comment from none other than G.K. Chesterton. I know this is in his book, What I saw in America. Chesterton only went so far south as Tennessee, which he regretted.

He said that he wanted to see more of the south. He must have come like in the later 1800s. He was probably visiting in the 1890s or something. He comes to New York. He goes on a lecture tour. And he does stay in a hotel in Nashville, Tennessee. And he saw a portrait of Andrew Jackson there. And I recall this passage in that book where Chesterton remarks, this was a man who instinctively knew that the bankers were up to no good.

And he did more in his career in politics to strike a blow against that special political interest of high finance than anyone in the West. And that's his commemoration of Andrew Jackson. That was how Chesterton remembered Andrew Jackson. And I really like that remark. I wish that I could quote him here, but that's what I remember him saying. So there's a prejudice against the banks, especially in the rural element that Jackson represents. Or I should say the rural and the laboring element, because. the Democrats do have a great deal of support in the established East Coast among the working

people, among the mechanics, and that sort of thing, the wage class. And that's an important element here that we should not lose track of. We're talking in this series primarily about the South and their position, but this is an important part of the Democrat coalition. And it's a very long-standing part. We might say that that's the part that survives to this day through all of the associations in the modern Democratic Party to organize labor. That's part of the legacy of the Democratic Party, the modern Democratic Party, that extends all the way back to this stage. So the banking situation in America at the time is a real difficult thing to understand. I've spent a lot of time on this year. In fact, I did a series of episodes with the Old Glory Club about the Bank

of the United States earlier this year, where I gave a lot of detail on it. But the gist of it is that there's the Bank of the United States, which is the most powerful established financial institution in the country. They have the largest credit reserve. They make the most loans, but they have a special advantage in that they can operate branches in all of the member states of the union. At no point in their history do they operate branches in all of the states. They do try out branches here and there and find they are not profitable and close them down. But they can move money from one side of the union to the other very quickly. And this is in the age before telegraphs and all the rest.

This is a huge advantage to people doing business across the union. And so the largest commercial interests, the largest industrial interests, will be running their finances from the branch bank in Boston and in the branch bank in New Orleans. because they can move their funds from one place to the other very quickly if they're using the Bank of the United States. The competition of the Bank of the United States are the state chartered banks, which are very differently run. They are chartered by their state where they originate. The states that charter those institutions have a means to regulate them, but the states have all manner of different regulations. And the chartered banks in the various states may not operate in another state without the permission of those states. And many of them don't.

All of these banks, the Bank of the United States and all of the state chartered banks issue their own paper currency. And this is an important factor. Without the Bank of the United States, the only alternative for a general circulating currency would be the coinage of the United States mint. At no point in this period, is there enough species in circulation, minted gold and silver coin to meet the needs of the circulation of money for the commercial aspect in the United States, nor even the agricultural interest. Agricultural areas have a major problem when it comes to gold and silver coin for hard currency.

Agricultural areas are generating wealth from animal life and from the vegetable world and from the ground itself. You know, we can link in mining with this, though it's a, and other forms of production like the mining of bat guano from caves for nitrates used for fertilizer and gunpowder. That's another special example of bringing wealth literally from out of the ground. They are selling these things in ports and river towns, in big ports like Charleston and New Orleans, and they need money in exchange. Now, because there's so many commodities going out of those ports, there is a lot of money coming in to those ports, the exchange taking place with factors and merchants in these port cities. but there's a chronic shortage of circulating media. And this means that the banks in the port cities are filling the gap by issuing private currencies, paper money. Now, this paper money is valued differently from place to place.

So if you were in New Orleans in 1830, you would be looking at the newspaper to see how the different paper currency, were trading what the credit was of the different institutions that issue these currencies. It wasn't only banks that were issuing these private currencies. There were great many chartered institutions of the various states that either they either worked to claim the right to act as a bank if they weren't originally chartered as one or they were explicitly given the right. to issue paper currencies, but not all of these were worthy. Some of them were in bad financial condition, and people would read the newspaper and see, oh, well, there's questions about the bonds

of this particular institution, say a canal company that had issued paper currency on the side, and people would short the paper currency, and so it would not trade at par. You might present bills that had been issued by a canal building company. And it looks like they've gone in more for issuing loans and paper currency than they have in actually getting the canal built. And this kind of information goes around. They're like, well, what is this company anyway? Like, do they have a plan to actually make money off of their investments? Is this actually worthwhile? What what happens when their loans are called in? Their paper currency might not be worth anything. And so you might present bills from the canal company at the mercantile. And the mercantile might say,

well, we'll accept that at 75% face value or 50% face value. This happens all the time with these private currencies. And of course, we see a parallel example, maybe much better today when we look at private currencies in our own day, cryptocurrencies are a good example of this, that no one really knows what they're worth, their values fluctuate dramatically based on rumors, and it presents a major downside. One of the advantages of the Bank of the United States

is it had the exclusive privilege of being the depository of federal treasury funds. So the customs houses in the port cities across the United States were depositing the tax revenues collected at those ports in the Bank of the United States and only the Bank of the United States. This gave the Bank of the United States a major advantage among all of the other financial institutions that were competing with it. Some of these states had really good regulation for their financial institutions. One outstanding example, which I like to mention for personal reasons, was Louisiana. Louisiana had a very well-regulated banking system. The state was very hesitant to grant banking charters and was quite rigorous in their auditing of these institutions

to make sure they were worthy of the privilege to issue paper currency. They had high reserve standards and such things. And Louisiana also had an outsized sort of footprint in that New Orleans was one of the largest ports in the world. And so they did a lot of business with international merchants. And they needed to have a sound banking system in order to keep that business and to keep that investment. So they had certain reasons. Other states that were less notable for sound banking were places like Illinois and Rhode Island, which frequently have financial catastrophes,

banks that are revealed to have virtually no credit, but have issued an awful lot of paper currency and this was a way to farm out profits with unacceptable risks and there are lots of crises in those particular states. But in the Western states that are growing very quickly, places like Missouri and Kentucky and Arkansas and such, they have a major need for credit. They've got a lot of people coming in trying to set up farms and businesses and such. There's a major market for banking there, great profits to be made. But because these frontier areas are primarily producing commodities, there isn't much money actually coming out of these places.

You need to bring money into these places. The banks try to fill the gap by low. lowering their standards. And this means that banks have a very bad reputation in the new states in the West. There are an awful lot of bank runs, collapses of these financial institutions, and the circulating media that they've produced becomes worthless. So people that have set up accounts at these banks put their savings into these banks are using the paper currency issued by these banks, find themselves up a creek.

their deposits are completely lost when the bank fails. There is no recourse for this. It's the risk that you take in dealing with the bank in this age. The Bank of the United States does not suffer from these problems, having these special privileges and prerogatives. But it's also a special patronage of the federal government. One of the major problems, political problems with the Bank of the United States is that a lot of foreign capital has come in to invest in shares of the BUS. And the BUS being so very prominent of the largest financial institution in the United States, having these special privileges being the depository of the federal funds and all the rest, it's issuing dividends. And these dividends are going abroad. Not all of them,

but a substantial minority stake in the Bank of the United States is broad. And so they're paying these dividends abroad. And this is a political problem that the Jackson constituency is very interested in. In 1816, the Bank of the United States had been abolished by President Madison, or at least under his watch. He was not particularly interested in seeing the bank rechartered, the first bank, right before the war of 1812. That causes a lot of problems because now when the United States goes to war with Britain in 1812, they do not have a stable financial institution to finance the war. And this leads to very near disasters, as we previously talked about. In 1816, Madison advocates the founding of a new bank of the United States. We see one,

William Jones become the CEO of the Bank of the United States. Madison appointed him to the role. In 1819, there is a major investigation into Jones because he is misusing his position. He is moving funds around in suspicious ways. He's overextending the bank. Suspitions are aroused when for the very first time in its history, the notes issued by the BUS start trading below par. And this was one of the major outstanding advantages the bank of the United States had was

that people tended not to speculate on its creditworthiness as they would a state-based bank. But in 1819, Jones is dismissed and investigation is started and he is revealed to be corrupt. He has misused his position for personal profit. that looked into his background would notice that before Madison appointed him, he was a failed businessman. He had been in bankruptcy. So he didn't have a very responsible record to go on. He got his position because of political connections. He gets replaced by a South Carolinian named Langdon Cheves, who has a very strict approach to managing the BUS. And in 1819, the year Chiefs comes in, he starts calling in loans and demanding that the bonds of the Bank

of the United States be paid in specie and not in any other media. So we see he is a hard money guy. He is trying to recover the reputation of the Bank of the United States by insisting on specie payments and accumulating a stock of gold and silver reserves in the bank, increasing its ratio of holdings versus debts. And this triggers a financial panic because a great many of the banks that are buying bonds for the BUS as a means of increasing their own credit. They have no specie to pay the bank of the United States for loans they've taken from the institution and the rest.

Cheves insists on specie payments. And this triggers a huge crisis. In 1819, banks fail mostly in these Western states, which are over leveraged and badly regulated. And so this causes a disproportionate kind of financial suffering, which the Bank of the United States is blamed for. And we could point our fingers at Jones and his mismanagement, but it's actually the wise policy of Chiefs, who is actually a responsible sort of figure in the institution. That's responsible for this, for the crisis of 1819, the panic. One William Crawford,

who we may remember was one of the presidential contenders, in 24, Crawford of Georgia, spoke in Congress on the occasion of the panic in 19. He said, all the evils, oh, my cat is flicking his tail in my notes. I'm sorry. He said, all the evils, which the community in particular parts of the country has suffered, are from the sudden decrease of the currency. So he's talking about the disappearance of the paper notes in these less developed areas of the country, agricultural areas of the country, less commercial areas that don't have as much of the circulating currency there, not the established areas in the East Coast. So we see in Crawford, he's blaming the scarcity of money and also blaming the Bank of the United States.

for this, saying this is because of the way the Bank of the United States is handling the Western areas, the agricultural areas, and we are suffering disproportionately from it. So we can have a nuanced take here. The Bank of the United States in its history was a stabilizing force. The Bank of the United States was also the recipient of special patronage. So we can divide the assets and the let's see the debits and credits of the Bank of the United States into a couple of categories. There's the constitutional question. We can set that aside for a moment. And we can look at the Bank of the United States from a purely business frame and say the Bank of the United States on the whole was very good for business and good for stabilizing currency and increasing the efficiency

with which money could move from one place to another. Now, for the agrarian, point of view, aside from the constitutional question, the agrarians don't like this, because this means the triumph of what Taylor called the paper system, the conflict between the clever foxes in their offices who can manipulate patronage and speculation for profits in the cities versus the actual producers of commodities, the farmers, the mechanics, the entrepreneurs. And we see the crisis that develops about the Bank of the United States in the Jackson administration is mostly a conflict between those two political interests, the well-connected establishment, the political class in the east, the merchants, those that do not produce things, the well-connected establishment, the political class in the east, the merchants, those that do not produce

things, those that handle the things others have produced, versus the source of what Taylor would call real wealth, what Taylor, what Jefferson, what Randolph would call real wealth, which is that older vision of the source of wealth, that Aristotelian vision of wealth, that wealth is real goods, the product of plants and animals, the wealth, that we dig out of the earth. And that other forms of wealth, such as manufactured goods from a mill, from a factory, or what you buy in a mercantile, through wholesale and retail processes from the work of merchants,

from the work of bankers, is a more derivative form of wealth. And then finally, money itself is a very artificial sort of item. It is not a natural good. it is the product of art. And it's useful because we need a medium of exchange, but this is further removed from the true source of wealth. This is a very old fashioned idea, but we find this in the philosophers from the classical time.

So we see a reaction to the crisis. We're going back before Jackson still here. In 1819, Kentucky was hard hit by the financial collapse. The reaction of the legislature there is very interesting. They immediately charter a new state bank, a Commonwealth Bank of Kentucky. They authorize it to issue $3 million in paper currency to fill the gap that has been revealed by the collapse of smaller banks. This is obviously inflationary.

They're going to issue a great deal of currency. They're going to back the institution with the state's credit. And there's controversy here. And this was always a tension between the agrarian element and what I would characterize as the more responsible business element. When it comes to banking, the business element, the establishment for, for the business, for all of their charges of special patronage, corruption, lobbying to keep their special charters. They do know something about how banks should work, and they do worry about inflation.

Issuing a lot of paper currency is very disruptive, and it will go down and value very quickly. So they call this out, and that interest in Kentucky leads to a Kentucky court decision that declares this measure unconstitutional. Now, the result of that is also interesting. What happens is there is a reaction in the legislature. The legislature abolishes the court, and they push through the Commonwealth Bank anyway. So we see even in this microcosm, this example of Kentucky, the populist agrarians versus the establishment bankers and merchants. And that's a good way to understand understand this controversy in microcosm. So the Bank of the United States Charter is a manifestation of this point, the conflict between

regional financial interests and the establishment interests from the East Coast. And this is one of the reasons why it manifests in the Jackson administration, because Jackson's support is in the south, the west, and in these newly open, newly developing agricultural regions. He wins Ohio, Indiana, Illinois. He wins Kentucky, Tennessee, Alabama, Mississippi, Louisiana. He loses New England. He loses New York. He loses, I want to say New Jersey. I think he does lose New Jersey to John Quincy Adams in 28. Those states represent the establishment East Coast in this election. And we see there that consolidation of economic interests in the merchant class,

in the maritime element that's based in those areas. The question of the industrial element is not as prominent at this stage. it becomes much more prominent in another decade. But those are the major interests that are supportive of the Bank of the United States. The merchants, the tradesmen, the people that are moving goods from place to place that want that efficient communication between the branches of the Bank of the United States, which enable their business to operate. There's the inflationary interest, and this is an important one because this is an irresponsible. interest in the bank war. It is, and it's overwhelmingly represented in the agricultural areas, in these quickly developing Western states. We would classify Indiana, Ohio, Illinois as Western as well.

There are a lot of people going in there. Their population is increasing greatly. They need currency. And because they're producing mostly commodities, they don't have much coming in. And they want patronage. They want a different kind of patronage. One of the great spokesmen for that interest is Thomas Hart Benton of Missouri. One time enemy of Andrew Jackson, Thomas Hart Benton had demanded a officer's commission in the War of 1812 when he had seen no action. Jackson very rudely dismisses him. and Benton draws two pistols and shoots Jackson twice.

I believe I've covered this story a few times. I don't remember if I've covered it in this series. But funny enough, Benton goes off to Missouri. Turns out there are a lot of people in Tennessee that want to kill him after his dastardly shooting of the venerable general. But he starts a career there in Missouri, and he becomes known as Old Bullion Benton for his advocacy of hard money. Benton is always calling on increased investment in the United States mint and its apparatus.

He wants more hard currency circulating in the West. Eventually, he gets his dream, and there is a mint established in New Orleans, and that's one of his legacies. So he's an interesting figure here, advocacy of Western financial interest, but a responsible one. Many of those that take to the floor of Congress to advocate for financial policy, they are wanting more banks issuing more paper currency, even though that destabilizes the system. You have over leveraged institutions that are more likely to fail. This causes banking crises. So we see the American system headed by Henry Clay, this Hamiltonian financial. policy, industrial trade policy. The American system wants to use the Bank of the United States

to fund internal improvements projects, to fund highways, to fund canals, to fund navigation improvements, lighthouses, to remove obstructions in rivers and such, all of which is to be funded by the protective tariff, the permanent protective tariff. We see the American system advocates like Clay up against the old Republicans who are against this means of national economic development on constitutional grounds, but also on agrarian grounds. That this constitutes a movement of wealth from the overly burdened agricultural areas who have to buy industrially produced goods at inflated prices. from either northern merchants who cannot produce them as efficiently as foreign competitors,

or from those foreign competitors, with the protective tariff added to the cost of the goods. So it siphons money from the agricultural areas, and it benefits the industrial areas. So the argument of the old Republicans, along with constitutional argument, the Jeffersonian response to Hamilton. They are also arguing their areas of the country will be put into a colonial relation with the industrial areas, that they are subsidizing by inflated prices the development of the industrial economy in northern states,

which they take offense at, and it makes perfect sense. It is a colonial relationship. So we see this conflict between, between political interests in the country at the time. The producers, the farmers, the mechanics, the laboring class, versus the what Jackson called the parasites, which are the bureaucrats, the bankers, the middlemen, who were only handling things they themselves did not produce.

So it's a harsh word to describe them. You might gather here the interests of modern economists, certainly of the left, who have gotten into this conflict in American history. That's a curious thing about this, is that the old Republicans would be picked up by the likes of Marxists, but it is the case. And John C. Calhoun has been compared to Marx on occasion, though he is certainly not an advocate of the proletarian revolution, quite the opposite. So Jackson, in 1830, he vetoes a internal improvements bill. This is the Maysville Road bill from Henry Clay.

This is one of Clay's pet bills. It's to build out the national road to Maysville, Kentucky, which is right there on the Ohio River, between Ashland, Kentucky and Louisville, Kentucky. I want to say Louisville. I know that's not the way our beloved Kentuckians would say it. They would say Louisville. They eliminate the syllable, I believe. Wonderful place, Kentucky.

I think we're mourning for Kentucky tonight with the news about Massey's defeat. Something that's weighing on me this evening. Well, I mean, if anything, it just goes to show who owns the government. Yeah. From clear as day. Yeah. I really wanted to see something different. And, you know, if they can buy one seat for a primary, well, November's coming up.

How many seats are they going to buy then? But hey, just vote harder. Indeed. Well, Kentucky is a place of a great political. heritage. They've produced so many great statesmen in our history, and I have a fondness for them. In a beautiful place, too, if you've never seen it. Incidentally, don't tell anyone. They may be able to keep it that way a little longer. But Jackson, he vetoes the Maysville Road. He says, this is a particular local interest, and it is not in the purview of the general welfare of the

United States. It only benefits a particular part. So he says, let's see, Clay's American system lays it down that Congress has constitutional power to make roads and canals without limitation. The internal improvement mania pervades Congress. The log rolling principles has fully displayed itself. Where would you stop? Would the people suffer themselves to be taxed for such purposes? So he sees the unfair character, the sectional character of the program, and he vetoes it on that ground. Bradley Berzer, who wrote a very succinct and very interesting volume called In Defense of Andrew Jackson. This was published just a few years ago. I don't have the date in front of me, but it isn't a very old book.

It's a very interesting little book, and I recommend it. Berzer says federal money could be justly appropriated only for undertakings that benefited the entire nation in Jackson's view. Now Jackson's great opponent in his workup to abolish the bank of the United States was Nicholas Biddle of Philadelphia, who is the executive officer of the BUS. And he gets very busy lobbying very publicly for the maintenance and the renewal of the BUS. This for him is a great mistake. He is ostentatious.

He is entitled. He's blue blood from the East Coast. And Jackson identifies him as his major adversary here. He has a personal dislike for these entitled elites. And Nicholas Bittles, his very ambitious public stand in favor of the United States, his open lobbying of members of Congress to renew the charter of the bank is an incentive for Jackson to double doubt and certainly for Jackson supporters who see this as a special and unwarranted federal patronage.

So Berzer says, again, the entire banking system, especially if not backed by gold and silver, was a con game in the view of the Jacksonians. It took money from hardworking producers and gave it to men who did nothing but push paper. So strangely, the debate about rechartering bank the United States took place a couple of years before the title. the charter was due to expire. And that was because both the Jacksonian Democrats and Biddle's Whigs decided to push the issue then. They were both very interested in settling this matter years before it was technically up for vote. And so it went through Congress. Henry Clay guides it through Congress, because this is a necessary element in his American system scheme, to have this large credit institution to finance his big projects.

And in 32, it passes both the House and the Senate and goes to Jackson's desk. There, Jackson vetoes it. And according to, let's see, according to Romini, Robert Romini, who is the great modern biographer of Andrew Jackson. It is the most important veto in American history. Let's see here. Let me find excerpts here from the veto message itself. My cat is in my way. Again, he's a good study companion. He's a good creature. And he only likes me. Doesn't get along with anyone else. Okay. So Jackson, he says in his veto, it is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes.

Now, this, you know, the claim of the lobbying interest of the establishment there, certainly on the nose. Now he says something quite surprising, very interesting, alarming to modern sensibilities, nevertheless entirely true. Distinctions in society will always exist. exist under every just government. Equality of talents, of education, or of wealth cannot be produced by human institutions." Well, there's a thunder clap, deserves to be repeated far and wide. Andrew Jackson, he says, in the full enjoyment of the gifts of heaven, in the fruits of superior

industry, economy, and virtue, every man is equally entitled to protection by law. But when the laws undertake to add to these natural and just advantages, artificial distinctions, to grant titles, gratuities, and exclusive privileges,

to make the rich, richer, and the potent, more powerful, the humble members of society, the farmers, mechanics, and laborers, who have neither the time nor the means of securing like favors, to themselves have a right to complain of the injustice of their government. There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal

protection, and as heaven does its reins, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing. In the act before me, there seems to be a wide and unnecessary departure from these just principles. Jackson continues, Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country? The president of the bank has told us that most of the state banks exist by its forbearance. Should its influence become consented as it may under the operation of such an act as

this, that is the recharter of the bank, in the hands of a self-elected directory whose interests are identified with those of the foreign stockholders, will there not be caused to tremble for the purity of our elections in peace and for the independence of our country in war? Their power would be great whenever they might choose to exert it. But if this monopoly were regularly renewed every 15 or 20 years on terms proposed by themselves, they might seldom in peace put forth their strength to influence elections or control the affairs of our nation. A topical remark from Andrew Jackson, if any private citizen or public functionary should interpose to curtail its powers or prevent a renewal of its privileges, it cannot be doubted

that he would be made to feel its influence. So this is, again, Jackson saying, you know, the bank is trying to be. kill me, but I am going to kill it. We see the points, natural versus artificial distinctions. The patronage of government here, the artificial patronage. The government picks this group to be the lords of finance in the country is an artificial distinction, which Jackson compares to a title of nobility. He says that it corrupts the republic. He points out, the element. This influences our foreign relations. This would be an influence in a time of war, potentially, the credit of the bank under the directorship of foreign stockholders, influencing the

bank's actions and decisions. He also points out this is a conflict between state authority and federal power grabs. The state chartered bank, the state chartered bank, should not be in competition with this specially privileged organization. Now, this is one of the big elements in the Jacksonian legacy, and we find it as far out as latter-day Democrats like Huey Long of Louisiana, who often spoke on this question. Huey Long was looking at the industries in Louisiana that were investing in the state, And he was saying, these places are all, they're all established in far away locales with stockholders who have no connection to Louisiana, who do not know our situation, do not know their own employees here. They do not know the needs of our state.

They are only an extractive force. They're there to make a buck. and we want increased state regulation. We want the state to look after its own people in this place. We are going to tax these corporations, build public works here to improve the value in this place to provide for the needs of our own people. and these far-away corporations in New York City, Standard Oil and the like, do not know what our people need. And Huey Long was speaking to the same point Jackson was in a different circumstance, obviously.

But this was a tradition in the Democratic Party for a long time, one that we can trace all the way back to Jackson's administration. Jackson was interested in the states having their own center of great. gravity in finance, in business, that they should have the businesses doing commerce, producing industry, making investments. Those businesses should be chartered in those states. And in effect, this is what Jackson accomplished with his veto of the bank in 32. He throws the responsibility, the regulatory prerogative onto the the state governments. And this is one of the really huge consequences of Jackson's move,

is that the states now have their own banks. Those are the only banks now in the country. These banks vary from state to state, but they can only look at their own responsibility if they have a bad banking system. It is their prerogative to regulate their own institutions in those States. This also arrests the rapid movement of money from one side of the country to the other. Now these state charter banks must deal separately with one another. There is no general institution to work through, to move the currency efficiently from one place to another. And this returns that center of gravity, that economic power, it spreads it. across the country in a way that it had only been done previously during the War of 1812,

ironically, a very bad time to try such a reform. So the state-based banks have regional currencies. The only general currency is the minted hard currency from the mint. And we see the proliferation of these private currencies across the country. Now, this is not without major negative effects. There are panics in the Van Buren administration just following Jackson because of over-leveraged state-regulated financial institutions. And this causes a great deal of economic disturbance across the country afterwards. Kind of a knock-on effect of the abolition of the bank of the United States. But they were not promising greater financial efficiency and credibility with this reform. Jackson was saying there is no constitutional power for the federal

government set up this institution to begin with, and the states have that proper power, not the federal government. So he destroys the Bank of the United States with this. Jackson's enemies in Congress, Henry Clay and Daniel Webster, point to McCullough v. Maryland. On this point, Jackson responds. You remember McCullough versus Maryland is John Marshall, basically rubber-stamping Hamilton's broad reading of federal powers. John Marshall reads Hamilton's opinion about the broad powers of the federal government, the loose reading of the necessary and proper clause, the general welfare clause. He reads that into case law in this landmark decision. Jackson says, to this conclusion, I cannot consent.

The Congress and President must each for itself be guided by its own opinion of the Constitution. It is as much their duty to decide on the constitutionality of any bill or resolution as it is the Supreme Court justices. The authority of the Supreme Court must not be permitted to control the Congress or the executive, and the president is independent of both. Now, this is really the better quote when we come to the famous quip attributed to Jackson. Marshall has made his decision, now let him enforce it. This is the more substantial quote, where we see that is what Jackson believed about the court. That is how Jackson took the opinion of federal judges, that the president is independent of that. Now, Jackson is emphasizing the constitutional nature of the question.

Jackson's opponents in Congress, Clay and Webster, are emphasizing the policy made by Jackson's veto, that Jackson is putting the question of banking into the states exclusively. They say this is a policy choice and that the president is in effect legislating from the White House and thus is a confusion of constitutionally delegated authority. Jackson, obviously, is taking the question of the interpretation of the Constitution as his primary justification for the action. But it is on those lines that Jackson's opponents come out against the veto power. Eventually, Clay actually proposes a constitutional amendment to strip the president of the veto power, a measure that fails.

But that is a very important development out of this. Biddle calls Jackson a deranged demagogue coming out of that veto, but Biddle is now exiting the stage. The Democrats, Jackson's constituents, they call the Vito. veto a second declaration of independence. And in it, they see what they call the vindication of the principles of 98, an important line going forward. The principles of 98 refer to the Kentucky and Virginia resolutions against the Alien and Sedition Acts. The assertion that the states have a prerogative on these matters of constitutional interpretation, because they're stakeholders in the federal union. So this is what Jackson's constituents are saying about the

situation. The result of the abolition of the bank of the United States is the immediate process to remove federal deposits from the bank of the United States. We remember in 32, the bank still has a couple years left in its charter to operate. Jackson was no time in this. He he also does not want to destabilize the system by just withdrawing everything immediately, right? The bank still has the special privilege of being the depository of tax revenue coming in at the customs houses and such. But the result is also paradoxical. We remember Jackson says in his veto, the power to grant special privileges to make the rich richer is evil. Well, in the case of the removal of the federal deposits from the bank of the United States,

Jackson chooses banks to deposit those funds in. These become known as Jackson's pet banks. And obviously, this is the words of his enemies in the matter, but the charge is stinging because there's always going to be someone chosen. Jackson is just choosing state chartered banks with a lot of friendly political connections to himself. So we can appreciate that criticism of Jackson, but obviously there's not another way of going about that. Men in power will choose who they patronize. What Jackson did was he destroyed an institutional power that was independent of the political

process up to the point of rechartering. That was where it was accountable and that was where he destroyed it. But the charge of Jackson's enemies that he's choosing special patronage for his friends is a substantial charge. Now, the result, as I mentioned, is a few years later, broad financial panics and bank failures across the country. A mushroom growth of irresponsible financiers that follow out of this reform, again, to fill the vacuum left by the disappearing bank of the United States. So that is the story of Jackson's war against the bank, his disestablishment of the BUS, and the end of that phase of that particular constitutional quandary. And in this, we can, we can well appreciate how Jackson became a kind of hero of the Jeffersonians, of the old

Republican element. In our next episode, we will be talking of the nullification crisis in Jackson's administration, which is where we see Jackson very independent and also nationalist, where he puts himself at odds with his sometimes comrades, the old Republicans, and those outspoken supporters of the principles of 98. And that is, that's going to be a very dramatic episode. I'm really looking forward to it. Awesome.

Well, this was great. I mean, especially considering what's happening nowadays with inflation, with money, prancing, and everything. You can at least look back to one person. who understood what a national bank was, even if he did have some ties to local banks, but the national bank is way more dangerous than local bank because local banks aren't printing money to start wars.

That's what national banks do. Yeah. Yeah, national banks destroy the sovereignty of the country. And in our situation, the Federal Reserve is maintaining this giant, grotesque system of patronage, the civil service of our own day, the military industrial complex, all of these institutions that have grown up around that special source of funds. And it's a very different system than what Jackson was going against. but he saw the danger inherent in it. And the things that he warned about there, I think, are much more evident to us than it was in his own day.

For sure. Hindsight's 2020. All right, Mr. Bagby, remind everybody where they can get your books. Yes, you can find my books at www. tallmanbooks.com. And you can find the reign of Andrew Jackson by Frederick Aug there. I put together a appendix in that volume, which contains Jackson's inaugural addresses, his farewell address, and the bank veto. You can actually get it there.

Awesome. All right. Until the next time. Have a great evening, Mr. Bagby. Thank you.