US History: Bank of the United States

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Questions and Answers

What was Nicholas Biddle's role in the Bank of the United States?

Regulator of state banks

Treasury Secretary

Founder of the Bank

Bank President (correct)

Why did the Bank of the United States need to keep gold and silver on hand?

To convert paper notes to hard currency (correct)

To regulate lending policies

To fund government projects

To issue paper notes

What was one of the primary functions of the Bank of the United States?

To regulate the availability of credit (correct)

To regulate the economy

To issue paper notes

To provide credit to citizens

What was the significance of the McCulloch v. Maryland Supreme Court case?

It established the legality of the Bank of the United States Signup and view all the answers

How did the Bank of the United States influence smaller banks?

By controlling their lending policies Signup and view all the answers

What was one of the main concerns of banks during this period?

Having enough gold and silver on hand Signup and view all the answers

What was a characteristic of the economy during the Jacksonian era?

Boom and speculation Signup and view all the answers

What was the main reason people were investing in the Bank of the United States during Jackson's years in office?

They were looking for quick investments and quick returns. Signup and view all the answers

What was one of the reasons some people distrusted the Bank of the United States?

It was issuing too much paper currency. Signup and view all the answers

Why did New York bankers dislike the Bank of the United States?

They felt it was unfair that New York City did not have the nation's central bank. Signup and view all the answers

What was the significance of the election of 1832?

It was a showdown between Jackson and his enemies over the Bank of the United States. Signup and view all the answers

Why did Jackson veto the re-charter bill of the Bank of the United States?

Because it was a private monopoly that benefited the wealthy. Signup and view all the answers

What was the consequence of Jackson's veto of the Bank of the United States' re-charter?

A financial panic occurred in 1837. Signup and view all the answers

What was one of the causes of the financial panic of 1837?

The rapid growth of state banks and speculation on American growth. Signup and view all the answers

What was the result of the government's order to buy government lands with gold or silver?

Banks called in their loans and many couldn't pay. Signup and view all the answers

Study Notes

The Bank of the United States

Established by the Supreme Court case of McCulloch v. Maryland, but came under scrutiny during Andrew Jackson's first administration
Led by Nicholas Biddle, serving as a rudimentary central bank, regulating credit availability and controlling lending policies of state and small banks
Issued paper notes, which could be exchanged for hard currency (gold or silver), and had to maintain enough reserves to meet customer demands
Effective in reigning in excessive borrowing and lending policies during the economic boom of Jacksonian America

Opposition to the Bank

Opposition from those who distrusted paper currency, preferring hard currency
Local bankers felt restricted by Biddle's oversight, hurting their business
New York bankers resented the Philadelphia-based bank and wanted a central bank in their own city
Concerns about the bank's monopoly and excessive power

The Election of 1832 and the Bank's Re-Charter

Henry Clay and Biddle allied to defeat Jackson, realizing they needed each other to win
Congress passed the re-charter bill in July 1832, but Jackson vetoed it, citing the bank's private monopoly and potential to enrich a few at the expense of the many
The veto was a popular move, contributing to Jackson's re-election

The Demise of the Bank

Jackson ordered the withdrawal of US deposits from the bank, leading to its eventual liquidation by 1841
Biddle's attempts to fight back by restricting lending and pressuring Jackson failed

The Panic of 1837

Caused by the void left by the Bank of the United States, leading to a surge in state banks and private banks offering money to finance American expansion
Speculation and inflation led to a financial crisis, with banks calling in loans, many unable to pay, and property foreclosing
The government's requirement for gold or silver to purchase government lands further exacerbated the crisis, leading to widespread financial ruin and panic

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Description

This quiz explores the role of the Bank of the United States during Andrew Jackson's presidency, including its legality and function as a central bank. Test your knowledge of this pivotal period in US history.