Andrew Jackson, America’s seventh president and founder of the Democratic Party, is considered among our nation’s greatest presidents — a sentiment this writer does not share. As one reason, I cite his censure by the U.S. Senate this week (March 28) in 1834, the only time in history a president has been censured.
It all started over the re-chartering of the Second Bank of the United States, which Jackson opposed because he considered the bank an instrument of the rich against the “little guy,” his core constituency, so he vetoed the legislation re-chartering it.
Meaning Jackson successfully killed the country’s only national bank, which, had he let matters stand, would have been another example of a short-sighted, but politically understandable executive decision. He did not let matters stand.
Rather, he decided to remove all government deposits from the national bank and place them in state banks, even though the national bank was financially sound. By law, however, only the Treasury secretary could transfer the national bank’s funds, and only after determining — and informing Congress — that its deposits were unsafe. Yet Jackson’s Treasury secretary in 1832, Louis McLane, refused to agree to Jackson’s plan because he knew the bank was financially solid.
So Jackson removed McLane as Treasury secretary and replaced him with William Duane, who had been a vocal critic of the bank. But to Jackson’s dismay, Duane also realized that the government’s deposits were far safer in the national bank than in state banks, and he refused to authorize their removal.
So Jackson authorized his removal, and replaced him with Roger Taney (later a controversial Supreme Court justice), who devised an ingenious way around what was becoming a bitter political contest between Jackson and the opposition National Republicans, who had a majority in the Senate and who increasingly viewed Jackson’s actions as blatantly unconstitutional. Taney simply “drew down” the national bank’s government funds by paying all government bills with those funds and then depositing future revenue in the state banks. Thus by 1833 all government funds were in state banks, which not only were far less solvent, but — ironically — were far less subject to federal oversight.
That resulted in the Senate’s censure motion, accusing Jackson of assuming “authority and power not conferred by the Constitution and laws.” Jackson ignored the censure, but his behavior so disgusted many of his former supporters that they joined a new opposition party, called the “Whigs” — a name meaning “opposition to executive usurpation of power.”
Another, unintended, but in hindsight unsurprising result of Jackson’s destruction of the national bank was the economic Panic of 1837, a five-year recession that was partly caused by a lack of confidence in President Jackson’s new state banking system.
