Like Ben Bernanke today, Nicholas Biddle cultivated the veneer of a benign civil servant calculating serenely far above the political fray. In reality he, like Bernanke, was up to his neck in the backroom game of power.
When Biddle’s bureaucratic cradle was rocked, he quickly morphed into a Machiavellian monster. Keep that in mind as Ben Bernanke gets progressively cornered by Ron Paul and the bourgeoning anti-Fed movement. (Already the Fed is less popular than the IRS.)
When you hear about the Federal Reserve Transparency Act getting stalled in committee, think of Daniel Webster, bought and paid for with central bank money. When you read Fed apologia in the New York Times, The Economist, and the Wall Street Journal denouncing the “reckless populism” of the Act, think of the newspaper editors in Biddle’s pocket. FULL ARTICLE by Lilburne
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Excellent article!
“You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out!”
Can you imagine any President in at least the last 100 years saying anything close to that?
Lilburne always knocks it out of the park.
Absolutely fascinating!
Thank you!
This paints Jackson as a saint but he was far from blameless. Contrary to what is written in the article the 2nd BoUS did not create the Panic of 1819. The cause of the panic was already in process by the time the bank was chartered. After the War of 1812 the US found itself with a huge debt. Not only that many of the state banks were allowed to refuse redemption of their paper note issues in specie so there was inflartion throughout the country and an inflationary boom. James Madison who opposed the 1st National Bank realized that only a national bank could stabilize the currency and so he changed his position on the 2nd BoUS.
The US was primarily an export nation so the Napoleonic Wars were a boon to US business. The Napoleonic Wars ended in 1815 and Europe returned to production. The contraction of foreign markets in Europe hurt US income and began an economic contraction. The state banks then increased their note issues to finance imports. But the European banks held their currencies in line with gold returning the notes to the state banks demanding specie leading to bank failures.
Congress, when it chartered the 2nd BoUS, included a provision that the bank had to accept the notes of the state banks. Initially the 2nd BoUS paid out specie on these notes, but soon recognized that its gold stock was being depleted. The 2nd BoUS then began to put pressure on the state banks to restrict their note issues so that they could honor their notes in specie.
Jackson was a very vindictive and ignorant man. He knew fighting but little else, especially following orders. When he ran for office he was primarily supported by men who had found gold in north Georgia on land owned by the Cherokee. Once Jackson was elected the treaties with the Cherokee were ignored and the gold prospectors, who poured into Cherokee land in violation of the treaties, were totally ignored by Jackson.
Jackson had lost most of his life savings in a bank failure earlier in his life so he developed a hatred for banks and bankers. When he became president he made it personal as he set about destroying the bank and Biddle. He succeeded and in the process created a constitutional crisis. He refused to follow the constitution and was nearly impeached for it.
What was left out of the narrrative is that after the destruction of the 2ns BoUS Jackson sent the gold to the state banks.The state banks resumed their over-issue of bank notes flush with specie and with no bank to demand redemption the state banks created massive inflation. When the inflation reached crisis level, Jackson took it upon himself to cure the inflation that he had created by issuing the Specie Circular suddenly halting state bank note usage for US land sales. The results was a massive deflation that created the Panic of 1837, one of the worst economic periods in our nation’s history.
Jackson allowed his “pet” banks to create massive inflation even pumping them up with gold from the 2nd BoUS, then he jerked the economy to a sudden and extreme halt. Jackson was an evil man violating treaties and causing the deaths of thousands of Cherokees forced off of their land stolen by Jackson’s greedy gold hoards.
Jackson is the closest we have come to having a dictator as president. Had he been elected earlier our nation could now be a dictatorship due to his refusal to honor the rule of law.
Really amazing article. Lilburne writing skills are superb.
“Jackson is the closest we have come to having a dictator as president.”
Lincoln?
Historians are all subjective. I see only one solution that satisfies both Dick Fox and the rest: End the Fed and the Feds, both of them (and return to the Constitution).
Outstanding!
Thank you everybody for the nice comments.
Mr. Fox,
Jackson was the villain of many stories (especially the Nullification Crisis). He just happens to be the hero of the story I tell here.
Regarding the Panic of 1837, economic historian Murray N. Rothbard convincingly demonstrated that neither Jackson nor the fall of the Bank were to blame for it. See the following link.
http://books.google.com/books?id=jA9UAZ2fKeoC&pg=PA97&lpg=PA97&dq=%22What+then,+was+the+cause+of+the+enormous+monetary+expansion%22&source=bl&ots=oxxZDrtMFk&sig=FKca1_MwtvRRlqw3AJxTBW8Csos&hl=en&ei=RHedSpvmK47-tQP7pJwZ&sa=X&oi=book_result&ct=result&resnum=1#v=onepage&q=%22What%20then%2C%20was%20the%20cause%20of%20the%20enormous%20monetary%20expansion%22&f=false
Brilliant! Thank you so much for this article!
I find it interesting that Rothbard rejects the ABCT when citing the cause of the Panic of 1837 choosing instead to use the Hoover excuse of blaming foreigners.
We may never know but there can be no doubt that the money supply increased rapidly before the 1837 crash. When Jackson injected specie into his “pet” banks he allowed them to massively increase the supply of notes. After this monetary expansion the Specie Circular abruptly ended the use of notes in the purchase of land causing the price of land to crash. Jackson essentially cut the money available for land purchases by 90% or more, because most land purchases were with notes.
But the Circular did not extinguish the notes. The holder was not going to lose the value so they were diverted to other monetary uses. The Circular created an excess in notes – those that would have been used for land purchases – significantly increasing notes presented at the New York banks for specie. The pressure of redemptions caused a run on the gold in the banks and the banks had to suspend redemptions.
The New York banks were the most conservative in the country. It is very doubtful that they would have had redemption problems without the issuance of the Specie Circular.
I’ll stick with the ABCT analysis rather than blaming the Brits and the Mexicans.
Sorry, I failed to mention one other problem. The use of gold to buy government land increased significantly. This gold was actually taken out of circulation because it purchased government land so it was sent to Washington DC to the Treasury Department. This created a shortage of specie in the banks with a relative excess of notes.
Discrete != discreet.
Compliment != complement.
Bourgeoning != anything at all.
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