Martin Van Buren and Andrew Jackson Organize a Tea Party Part Two

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

This is part two of a three-part series. To read part one, go here.

In 1832 Martin Van Buren helped Andrew Jackson decide precisely when he would end the charter for the Second Bank of the United States – the only American central bank of issue before the establishment of the Federal Reserve. Over the next five years, by legislation, executive order and political precedent, the two men would carry out the rest of their plan for the application and enforcement of uniquely American rules for government finance: All net borrowings, payments and tax collections by the national Treasury would be made in gold and silver coin.

By the end of their lives, John Adams and Thomas Jefferson had become affectionate pen pals. They had given up past personal quarrels and were enjoying the shared celebrity of being the most famous “founders” of the American Republic – the ex-presidents who were also members of Washington’s first cabinet. They had also lived long enough to see the policy differences between their two parties largely disappear. The merchants of Boston and the planters of the Tidewater continued to find federal taxation of imports as obnoxious as ever, even as the textile manufacturers and ironmongers had come to see the value of protection; but no one could offer another answer to the question of how the Treasury could collect enough money to pay its bills. The hated excise taxes had been repealed, and both Federalists and Democrat-Republicans agreed that the Constitution did not allow and the people did not want direct taxes.

Two decades after Hamilton’s death, Jefferson was still complaining that Washington’s first treasurer had won the debate over national finance; but, as he and John Adams both knew, Washington had the advice of his secretary of state, treasurer and vice president. The United States had chartered a national bank, contrary to Jefferson’s objections; but the first Bank of the United States had not been established on the terms that both Adams and Hamilton had proposed. Washington and the first Congress had rejected an American version of the exchequer and the Bank of England. What Jefferson called “the Hamiltonian system” had only been adopted when his own Democrat-Republican party gained political control. Revenue collection by tariff and monetary management through a central bank of issue had been established and fully embraced by Madison and Monroe. Both the Democrat-Republican majority and the lingering Federalist minority in Congress were now firmly in support of the further growth of the Second Bank of the United States. As far as Jefferson and Adams’ parties were concerned, the “money question” had been fully resolved.