What was the purpose of pet banks?

In an effort to curb excessive land speculation and to quash the enormous growth of paper money in circulation, Jackson directed the Treasury Department, “pet” banks, and other receivers of public money to accept only specie as payment for government-owned land after Aug. 15, 1836.

What is a pet Bank Apush?

pet banks. A term used by Jackson’s opponents to describe the state banks that the federal government used for new revenue deposits in an attempt to destroy the Second Bank of the United States; the practice continued after the charter for the Second Bank expired in 1836.

What was Jackson’s argument against the bank?

Andrew Jackson vetoed the bill re-chartering the Second Bank in July 1832 by arguing that in the form presented to him it was incompatible with “justice,” “sound policy” and the Constitution.

How are pet banks an example of the spoils system?

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. The pet banks and smaller “wildcat” banks flooded the country with paper currency.

What did the bank war lead to?

The Bank War was a political struggle that developed over the issue of rechartering the Second Bank of the United States (B.U.S.) during the presidency of Andrew Jackson (1829–1837). The affair resulted in the shutdown of the Bank and its replacement by state banks.

What was the result of Jackson’s Bank War?

What was the bank veto?

What happened after Jackson vetoed the bank?

In 1832, the divisiveness led to a split in Jackson’s cabinet and, that same year, the obstinate president vetoed an attempt by Congress to draw up a new charter for the bank. Finally, Jackson had succeeded in destroying the bank; its charter officially expired in 1836.

How did the creation of pet banks lead to inflation and ultimately the Panic of 1837?

These pet banks were unregulated and had no power to regulate wildcat banks that sprang up in the West. Easy credit and inflation led Jackson to issue his Specie Circular, which required land payments to be made in specie. Thousands of individuals, businesses and banks went bankrupt in the resulting Panic of 1837.

Why was the bank veto unconstitutional?

This bill passed Congress, but Jackson vetoed it, declaring that the Bank was “unauthorized by the Constitution, subversive to the rights of States, and dangerous to the liberties of the people.” After his reelection, Jackson announced that the Government would no longer deposit Federal funds with the Bank and would …

What is a pet bank?

These banks were called pet banks. They earned the name ‘pet’ because Jackson’s political allies ran them. They were not chosen based on financial stability. These original twenty-three pet banks could not handle all of the federal funds, so more banks were chartered. Everywhere banks sprang up begging for charters and Jackson’s favor.

What was the purpose of Jackson’s pet banks?

In September 1833, he issued an executive order to the Secretary of the Treasury to take all of the federal funds out of the BUS and deposit them into twenty-three state banks that were friendly to his administration. These banks were called pet banks. They earned the name ‘pet’ because Jackson’s political allies ran them.

Why were pet banks bad for the economy?

Pet banks were also making risky investments, and could not stabilize the dollar’s value. All of this extra money encouraged land speculation, but inflation rose dangerously.