Pet banks

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Pet banks is a derogatory term for state banks selected by the U.S. Department of Treasury to receive surplus Treasury funds in 1833. Pet banks are sometimes confused with wildcat banks. Although the two are distinct types of institutions that arose concomitantly, some pet banks were known to also engage in practices of wildcat banking.[1] They were chosen among the big U.S. banks when President Andrew Jackson vetoed the recharter for the Second Bank of the United States, proposed by Henry Clay four years before the recharter was due. Clay intended to use the rechartering of the bank as a topic in the upcoming election of 1832. The charter for the Second Bank of the United States, which was headed by Nicholas Biddle, was for a period of twenty years beginning in 1816, but Jackson's distrust of the national banking system (which he claimed to be unconstitutional) led to Biddle's proposal to recharter early, and the beginning of the Bank War. Jackson cited four reasons for vetoing the recharter, each degrading the Second Bank of the United States in claims of it holding an exorbitant amount of power.[2] These reasons for vetoing the recharter were centered around Jackson's belief in his role as the representative of the common man. Amos Kendall, who was the intellectual driving force behind Jackson's 1832 election and Jackson himself, led Jackson to believe that the bank posed a political threat to Jackson. Kendall cautioned Jackson that unless he got rid of the Second Bank of the United States, it would find a way to elect its own candidate to the White House after Jackson was gone. Jackson saw the bank as a threat to the common man and "the great enemy of republicanism",[3] and argued that as long as the national bank existed, the working class was constantly in danger of losing their stake in government.[4]

The term "pet banks" gained currency because most of the banks were chosen not because of monetary fitness but on the basis of the spoils system, which rewarded friends and political allies of Andrew Jackson with positions in government.[5] After winning reelection in 1832 significantly due to his argument for the removal of the Second Bank of the United States, Jackson ordered the removal of the government's deposits in the Second Bank of the United States to these pet banks, which were essentially state-chartered banks that were loyal to the Jackson administration because of the spoils system.[6] By 1833 there were 23 "pet banks" or state banks with US Treasury funds.[7] The institution of these pet banks led to a huge increase in land speculation, mainly due to the managers' inability to effectively handle and control the nation's money. The nation's banking capital, loans, and note circulation all increased by an incredible amount during the period of the pet banks because of the unqualified management, leading to an increase in land speculation during this period.[8]

Most pet banks eventually lost money and didn't succeed in their investments, partially because the 23 pet banks were not sufficient to hold the entirety of the public's money.[9] The pet banks and smaller "wildcat" banks flooded the country with paper currency. Because this money became so unreliable, Jackson issued the Specie Circular, which required all public lands to be purchased with gold and/or silver. Eventually, the way that all of the government's funds were spread throughout the country because of pet banks made it so that it was near impossible to mobilize the remaining money in the specie reserves, which were the reserves of gold and silver created by the Specie Circular.[10] These factors ultimately contributed to the major dip in the economy that was dubbed the Panic of 1837.[11]

## References

[edit]

1. ^ Knox, John Jay. "A history of banking in the United States." B. Rhodes & Co, 1903. Print.
2. ^ The Enduring Vision, A History of the American People, Fifth Edition. Paul S. Boyer, Clifford E. Clark, Jr., <3 Joseph F. Kett, Neal Salisbury, Harvard Sitkoff, Nancy Woloch
3. ^ "Andrew Jackson, Banks, and the Panic of 1837". lehrmaninstitute.org. Retrieved May 26, 2020.
4. ^ "The Bank War · Common man or con man--was Andrew Jackson a fraud? · Young American Republic". projects.leadr.msu.edu. Retrieved May 19, 2020.
5. ^ "Andrew Jackson, Banks, and the Panic of 1837". lehrmaninstitute.org. Retrieved May 19, 2020.
6. ^ "Andrew Jackson, Banks, and the Panic of 1837". lehrmaninstitute.org. Retrieved May 21, 2020.
7. ^ "Andrew Jackson, Banks, and the Panic of 1837". lehrmaninstitute.org. Retrieved May 19, 2020.
8. ^ "Andrew Jackson, Banks, and the Panic of 1837". lehrmaninstitute.org. Retrieved May 26, 2020.
9. ^ Wiegand, S., Lessons from the Great Depression For Dummies (Hoboken, NJ: Wiley Publishing, Inc., 2009), p. 27.
10. ^ "Andrew Jackson, Banks, and the Panic of 1837". lehrmaninstitute.org. Retrieved May 21, 2020.
11. ^ Tindall, George Brown, and David Emory Shi. America a Narrative History. 7th ed. New York: Norton & Company, 2007. Print

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Andrew Jackson

* 7th President of the United States (1829–1837)
* Senator from Tennessee (1797–1798, 1823–1825)
* Federal Military Commissioner of Florida (1821)
* U.S. Representative for Tennessee at-large (1796–1797)

Life|

* Slave trading
* Land speculation
* Horse racing
* Violent incidents
* Fatal duel
* Legal affairs
* Plantations:
* Poplar Grove
* Hunter's Hill
* The Hermitage

Military and
diplomatic|

* 1813–14: Natchez Expedition
* Creek War
* Fort Strother
* Battle of Talladega
* Battles of Emuckfaw and Enotachopo Creek
* Battle of Horseshoe Bend
* Treaty of Fort Jackson
* 1814–15: Southern theater of the War of 1812
* Battle of Pensacola
* Arrest of Hall and Louaillier
* Battle of New Orleans
* 1816: Jackson's Military Road
* Battle of Negro Fort
* Treaty of Turkeytown
* 1818: Treaty of Tuscaloosa
* Salt Lick Reserve
* Jackson Purchase
* 1818: First Seminole War
* Arbuthnot and Ambrister incident
* 1819: Adams–Onís Treaty
* Congressional investigation of Seminole War
* 1820: Treaty of Doak's Stand
* 1823: Treaty of Moultrie Creek

Presidency|

* First inauguration
* Second inauguration
* State of the Union
* 1829
* 1830
* 1831
* 1832
* 1833
* 1834
* 1835
* 1836
* Judicial appointments
* Taney Court
* Executive actions
* Vetoes
* Pardons
* Foreign policy
* First Sumatran expedition
* Snow Riot
* Assassination attempt
* Governance: Spoils system
* Swartwout–Hoyt scandal
* Petticoat affair
* Kitchen Cabinet
* Indian policy: Indian removal
* Indian Removal Act
* Trail of Tears
* Treaty of Dancing Rabbit Creek
* Treaty of New Echota
* Treaty of Pontotoc Creek
* Treaty of Payne's Landing
* Treaty of Chicago
* Treaty of Cusseta
* Black Hawk War
* Second Creek War
* Second Seminole War
* Supreme Court decisions: Cherokee Nation v. Georgia
* Worcester v. Georgia
* Economic policy: Bank War
* Senate censure
* Banking in the Jacksonian Era
* Hard money
* Specie Circular
* Maysville Road veto
* Nullification crisis
* Tariff of 1832
* Ordinance of Nullification
* Proclamation to the People of South Carolina
* Force Bill
* Tariff of 1833
* Pet banks
* Panic of 1837

Politics|

* 1824 United States presidential election
* "Corrupt Bargain"
* 1828 United States presidential election
* 1828 Jackson campaign
* Coffin Handbills
* 1832 United States presidential election
* 1832 Democratic National Convention
* Establishment of the U.S. Democratic Party
* History of the U.S. Whig Party
* Anti-Jacksonian Party

Slavery|

* Jackson and slavery
* Gilbert
* Alfred Jackson
* Hannah Jackson

Public image|

* List of memorials to Andrew Jackson
* January 8 (holiday)
* "Half Horse and Half Alligator"
* "King Andrew the First" (1832)
* Portraits of Andrew Jackson
* Equestrian statue in Washington, D.C., and New Orleans
* Jackson, Mississippi statue
* U.S. Capitol statue
* Films about Andrew Jackson
* Bloody Bloody Andrew Jackson
* U.S. military vessels named after Jackson
* Jackson Square (New Orleans)
* Andrew Jackson State Park (South Carolina)
* Andrew Jackson Centre (Ireland)
* Jefferson–Jackson Dinner
* Black Jack stamp
* USD$20
* Jackson on other U.S. currency
* Confederate States dollar

Historiography|

* Jacksonian democracy
* Bibliography of Andrew Jackson
* The Age of Jackson
* Robert V. Remini § Andrew Jackson
* American Lion

Family|

* Rachel Jackson
* Marriage controversy
* Donelson family
* Andrew Jackson Jr.
* Acting First Ladies: Emily Donelson
* Sarah Yorke Jackson
* Wards:
* Edward G. W. Butler
* Andrew Jackson Donelson
* Daniel Smith Donelson
* A. J. Hutchings
* Indigenous "adoptees":
* Theodore
* Charley
* Lyncoya Jackson
* Poll (parrot)

* ← John Quincy Adams
* Martin Van Buren →

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