Andrew Jackson His Monetary Policy - RR144N26

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Professor: Rushdoony, Dr. R. J.
Title: 26. Andrew Jackson: His Monetary Policy
Course: Course - American History to 1865
Subject: Subject:History
Lesson#: 26
Length: 0:38:47
TapeCode: RR144N26
Audio: Chalcedon Archive
Transcript: .docx Format
American History to 1865(4).jpg

This transcript is unedited. It was:
Archived by the Mt. Olive Tape Library
Digitized, transcribed, and published by Christ Rules
Posted by with permission.

Our subject this first hour is the administration of Andrew Jackson. 1829-1837. The Administration of Andrew Jackson is of particular importance, so we are giving it a little more time than we have to a number of others, because of one particular issue, the monetary. First of all, a little bit about Andrew Jackson. There is a great deal of controversy about Jackson. Men who are Liberals both regard him as a great man, and detest him thoroughly. He is called both a radical and a reactionary. It is easy to see how Andrew Jackson can create such diverse reactions. He was a strange and sometimes difficult person. There are things about his character that are very appealing, and some that make it obvious why he was hard to get along with.

Jackson was a small boy when the War of Independence broke out, he had lost his father, they had to flee for his life, he was physically mistreated by the British troops, and he developed a life-long hatred of anything British. He went into, in the Tennessee area and became a very successful business man and an owner of a large plantation. He gained his great reputation nationally, when in the war of 1812, on January 8, 1815, he defeated the British at New Orleans. This immediately made Jackson a popular figure with all the people.

In 1818, Jackson was sent on a Florida Campaign against the Seminole Indians, because of some problems they had with them. Now Florida at this time was Spanish Territory. Therefore the Campaign was only to be one of punishing the Indians, preventing their further depredation on Americans within the area, and returning. Jackson however, not only punished the Indians, destroyed their villages, but he also seized Florida. In the process he executed two British agents who were in the area. One, a Lieutenant, Robert C. Ambrister, the other a business man, Alexander Arbuthnot.

There might have been some ground for the execution of Ambrister, but it’s questionable. On the other hand, the execution of Arbuthnot was purely arbitrary and unjust. Arbuthnot was an old Scotchman who was a trader there, and who genuinely liked the Indians. He was there friend, and as their friend he warned them that Jackson was on his way to destroy their villages and their communities, and the Indians escaped. [00:04:39]

When Jackson arrived there was nothing there but just...[edit]

When Jackson arrived there was nothing there but just the remains of the Indians camp. For this warning he was seized and executed by Jackson. Now I cite this because it gives you one side of the character of this man. He could be very unreasonable, grossly unfair at times. Moreover he seized, as I indicated, Florida unjustly, from the Spaniards. This made him very popular with the people, but it also proved to be an embarrassment later when he was running for the presidency, because the charge raised against him was that Jackson represented a kind of arbitrary power; that constitutionalism would not be safe under Jackson. Later on when he did become president one of the most common cartoons ridiculing and caricaturing Jackson, was to portray him in royal robes with a scepter, and to call him King Andrew.

Jackson tried to deny the charges that his action had been arbitrary, and without orders. And the result was one of the more sorry episodes of his life. He forged a document to give the impression that he had actually received orders from the administration, telling him to seize Florida. This was untrue. Yet having said these things about Jackson, we would have to say that normally he was honest and straightforward. Moreover Jackson was a more devout man than most presidents of that era, and certainly far more devout than most presidents of this era.

Jackson was a Presbyterian, he was a very faithful church goer, you find over and over again in his writings evidences of the fact that he was a man of faith. Jackson could be very unforgiving. Any man that crossed him he would remember for the rest of his life, and try to get even with. On the other hand Jackson could sometimes be very forgiving, surprisingly so. [00:07:44]

Then another aspect of Jackson...[edit]

Then another aspect of Jackson. The impression that many people have as they read of his actions is that he was a very hot-headed, fiery character. In reality, there is no knowledge of him ever having lost his temper. He was a great actor, he felt it would accomplish a great more if he pretended with delegations of congressmen or senators or various citizens, to act angry, to carry on as though he were in a fit temper. And yet when the people had gone he would laugh about it. It was obvious he was acting, dramatizing, in order to make his point, in order to in a sense intimidate people.

Now, the important thing about Jackson, and I say all this to give a background to his character because this was one of the most difficult things ever done by a President, over intense opposition. And if Jackson had not been the kind of difficult and stubborn character that he was, he could not have accomplished this.

God uses us, not only with our strengths and our virtues, but also with our weaknesses and our sins. So Jackson, a very great strength, of great virtues, but also some very glaring faults, was used in his total personality by God, and was the right man for his times. The issue that concerns us as I indicated is the Bank of the United States. Very early Jackson had gained a great deal of wealth in Tennessee, had become a very rich man, owning a great deal of land, through various speculations in the paper money boom. You recall I indicated that the Constitution did not permit the United State to issue any paper money, only Gold and Silver could be legal tender. However, does anyone remember what I pointed out was the weakness of the Constitution on the monetary question? It called for hard money as legal tender only, but how was paper money issued? Yes?

[Audience Member] The bank.

[Rushdoony] The banks, right. And the constitution had failed from prohibiting banks from issuing paper money. [00:10:56]

And Banks regularly did so at that time...[edit]

And Banks regularly did so at that time. Since that time of course, it has become a government monopoly. Which is even worse. Now, the banks were issuing paper money, and this paper money created a boom. You recall I said that if I gave each of you a certain sum of money, if I gave each of you say $500, it would create a boom, perhaps in buying books from Dave Thoburn, perhaps in going down to a shop here and buying some clothes. You would create a small business boom if you suddenly had $500 of paper printed wealth. Now, many business men and many bankers, and many farmers and ordinary citizens were all in favor of this kind of sudden prosperity. It was a way to create boom on a frontier.

So that, on the frontier as well as on the settled areas such as Virginia and Pennsylvania and New York, there would be a demand for banks to be created, and then being created to issue large amounts of paper money, which people could go there and borrow, and put into circulation. And so there would be a sudden burst of money, a sudden burst of prosperity in business. In terms of this kind of inflationary prosperity, Andrew Jackson became a very wealthy man. [00:12:46]

Then the panic of ...[edit]

Then the panic of 1797 hit. And it wiped out this paper boom. People began to demand gold and silver for their paper, and no one could produce it. The result was that Jackson was not only wiped out, but went into bankruptcy. He ended up with next to nothing. It was a bitter lesson for Jackson, but he never forgot it. And the more he thought about it the more he came to the conviction that the Constitution was right, that anything but gold and Silver was a danger to the economy of the country.

As a result, he had a deep hostility to paper money, to the United States bank, and to any kind of speculation, land speculation, mercantile speculation, and banking speculation. He had a horror also of debt, debt to him represented virtually a sin. Now when a man comes to this kind of conviction in a day when very many people are dependent on paper money, and like it, because it has get-rich-quick possibilities, it certainly makes him a controversial figure. And so the moment Jackson entered into public life, he was one of the most controversial figures in the history of this country. AS I indicated earlier, he still is. To this day it is difficult to get a book on Jackson that will tell a full-orbed story. They can be violently opposed to him, and call him every kind of name imaginable, otherwise sensible historians speaking of him as a vicious and iniquitous man, and others virtually idolizing him, and sweeping his faults under the carpet as it were, so that people would not be aware of some of the flaws in his character. [00:15:32]

Now his candidacy therefore was a critical point in...[edit]

Now his candidacy therefore was a critical point in the history of this country. There were those of course who believed that Jackson did not mean what he said when he declared that he was against paper money, and against the United States bank. They said: “He is simply another politician, and this is a way of getting votes. But when Jackson gets into office, we will have nothing to worry about.”

But Jackson as he later stated on his veto message on the United States Bank: “Governments should afford equal protection, and equal benefits.” Now in your history books you may see references to Jackson and the Jackson administration as a great turning point in terms of Democracy. This is actually not true. Jackson did not represent, say, a more radical element that had come into power. This attitude was fostered by a number of the Virginians of the day. At this point in history it is hard for us to realize how heavily the State of Virginia dominated the United States. As a matter of fact the presidency was for some years virtually a Virginian operation, and Washington run by Virginians, so that there was more than a little feeling on the frontier that one of the things to be done was to shake loose the hold of Virginians upon the White House, and upon Washington D.C.

This was one of the things that made Jackson popular with some elements, but apart from that factor Jacksons idea was not that he was carrying democracy forward, but that his administration was essentially a restoration of constitutionalism, going back to the constitution, to its hard-money clause.

Thus when he became president, his goal as president was first, to reduce the circulation of paper money. AS far as possible, to reduce the circulation of paper money. Since the constitution forbade the United States from doing anything but coining money, he was going to see to it that the United States did not do any more than that. [00:18:53]

And as he correctly saw, the United States bank was...[edit]

And as he correctly saw, the United States bank was and agency and arm of the United States government, and it was printing money. And therefore he was determined to eliminate this factor as unconstitutional.

Then second he was going to try to forbid deposit banks, those that were in the states to issue small note. He wanted to eliminate all paper under $20. Now he did not have the power under the constitution to declare that these state issues were illegal, but he could pass legislation preventing the circulation of certain kinds of notes he felt, and this could keep out a great deal of inflation, he felt.

Then third, although the constitution had specified that only gold and silver shall be legal tender, Tax collectors were accepting paper money as legal money. This was clearly unconstitutional. So Jackson worked for reinforcing that constitutional provision, to refuse paper for taxes, in terms of the constitution. [00:20:36]

Then next, to institute laissez faire...[edit]

Then next, to institute laissez faire. Now we discussed laissez faire earlier, I’ll put it on the board and spell it out, so that you will know the correct spelling thereof.

Now laissez faire is a French term and what it essentially means is: “Leave alone.” Keep your paws off. And the meaning of V is that business cannot be interfered with by the government. Let the free market operate. Keep government out of business.

So, Jackson was calling for the separation of government and business. What secretary of government was it who had brought government and business together, trying to foster business? Does anyone recall, this is very important in American history. What Secretary of Treasury? Who? I think I heard someone say… Doesn’t anyone recall? Hamilton, right.

Alexander Hamilton had felt that we have to get the country out of the terrible situation it is, now that the war is over, we’ve got to get the economy rolling by establishing the bank of the United States, making paper money, making it available for business, so that industry can get started in the United States. SO Hamilton began a policy of the protection and furtherance of business by means of government action. One of the results of this too was protective tariffs for American industry.

Now Jackson’s policy was, as far as he could, to lower the tariffs and to end the union of government and business. So that with this divorce of business and government the free market could again operate. Now Jacksons policy led to a tremendous boom of economic activity in the United States, in the generation that followed up until the civil war. [00:23:56]

In more recent years there has been a growing protection...[edit]

In more recent years there has been a growing protection of business , until finally labor began to complain against this, and demanded subsidies for itself and protection, so that the Wagner Act in effect gave government protection to labor unions, in various acts that otherwise would be illegal. Now of course there is a great deal of protest on the part of the business man against the power of the labor Unions. What they forget is that this type of protectionism has long existed in American history. Government protection, government subsidies to farmers, to agriculture, one big segment of our industry, to business. And why should labor get in it also. And so today the feeling is that everybody should get subsidies, and the result is that you have even some Christian schools feeling that the government should have subsidies for them.

Well, of course all of this from the point of view of Jackson was illegitimate. At that point it was only business getting subsidies. Jackson ended it. His goal was to restore the full force of the constitution, and to eliminate inflation by eliminating paper money.

As a result, when the bank charter came up for renewal, Jackson vetoed the measure. Now, Biddle was the head of the bank, and the Biddle’s in Philadelphia are still a very powerful family. And Biddle was determined that he was going to make Jackson pay for this, and he embarked on a very foolish course, that in 1837 after Jackson left office, and Van Buren took office, plunged the country into a very serious depression. First of all to create trouble and to arouse discontent on the part of the people with regard to Jackson, he began to call in all loans. Now remember he had had the power up until that time through the bank charter, to create paper money. He also at the same time had a state charter, so in a sense he had a double existence. [00:27:05]

Well, immediately the problem was very serious for...[edit]

Well, immediately the problem was very serious for business men. Suppose you had borrowed ten thousand dollars to start a business, and suddenly the bank called that loan, which it had a right to. Normally you would have 5 years to pay it, but now you had to pay it in 60 days. You can imagine the kind of shock it created in every business community where the bank of the United States had a branch office. So in every community the business firms were on the rocks, ready to fold up. Then suddenly Biddle reversed himself, and started to print all kinds of paper money, in order to produce an inflationary boom. The net result of it was, Biddle did not succeed in shaking Jackson, but he did shake the economy. It led to the collapse, the depression of 1837, which virtually wiped out Van Buren, who was Jackson’s successor, because he took the blunt of the blame, and was very badly treated by the people, just as they always blame the president who is the White House for whatever depression results. Hoover in the 20’s took office and the stock market collapsed, he had nothing to do with it, but the people couldn’t wait fast enough, er, couldn’t wait to boot him out of office, as though he had created it. Van Buren got the blame, but it was the Bank of the United States which to a large extent had been responsible, and one of the things that added to the problem, aggravated it, was a crop failure, in 1837.

The crop failure of 1837 created a very serious crisis on top of the monetary, the economic crisis. Now it’s a very interesting thing that one of the most important men associated with Jackson as a person who both expressed his thinking, and gave council to Jackson, wrote on economics at great length. William Gouge.

Gouges books on paper money and banking which became available in one volume, are among the most important documents on the subject in American history. For a long time they were virtually unobtainable, and there were very few copies left in the United States, and I felt very privileged that I have one of the very limited number of original copies of Gouge, but lately I understand that they have begun to reprint Gouge, because he is important. Now one of the things that Gouge said in his book, and what Gouge has to say is important because his influence on Jackson was great, and he also reflected Jackson’s thinking, he said: “If we have a paper currency prevail in the United States, it will create an inflationary boom. This inflationary boom will hurt the famer, and help the speculator so that the farm will suffer in favor of the town, and then the town will suffer in favor of the city, and the city will see a vast inflationary boom, so that we will become progressively under a paper currency, an urban culture. City oriented. But when the collapse comes, the disaster will be all the greater, because having become an urban civilization, people are more vulnerable, in a time of collapse in a city then they are on a farm. Because on a farm the possibility of survival, of taking care of yourself, of pulling in your belt and getting along, is vastly greater. But when you have created a paper money inflation and ultimately have the day of reckoning, and you have an urban culture predominately, the disaster” He declared: “Will be staggering.” [00:32:42]

“Moreover,” He declared: “After a certain point a paper money inflation” he said: “is like a disease, which can have only one outcome, death.” This then was the prediction of William Gouge.

It was a very remarkable prediction, and a very remarkable thesis. Jackson thus had a very great role to play in the United States, in that by restoring it to a hard money policy, he made possible a tremendous growth of industrial expansion in this country, under a genuinely free-market economy. It was not a perfect free market economy, but a very strong one. Does anyone know who after Jackson, later on in the century, the strong hard-money president? A man who has been very much underrated as a president, and should be given more credit. He will not be in our period so we aren’t going to deal with him, but it is important to know, because he is one of the great hard-money men in the history of the United States. Grover Cleveland.

Grover Cleveland was one of the great hard money men, who at a critical period in American history, when again paper money forces were very strong, and inflationary forces were very strong, held firm on the issue of a hard money policy. However in this century beginning with one very prominent president we definitely swung into the paper money camp, and have been going further and further into that area. Who was that president?

[Audience] Roosevelt?

[Rushdoony] Well, Roosevelt emphatically because he took us off of gold, he was the second president to make a major step into inflation. But there was one before Roosevelt who started us.

[Audience] Woodrow Wilson?

[Rushdoony] Woodrow Wilson, very good. Woodrow Wilson. Woodrow Wilsons policies were very definitely anti hard money, and therefore inflationary. Now, we have just a minute or two, but here is a very important point to remember. If a man is not a hard money man, he is therefore almost certain to be a socialist. Whether he realizes it or not, he is to all practical intent a socialist. And so it is every president who has had a desire to move towards socialism has been anti hard money. You cannot have socialism without paper money. [00:36:23]

The power of the government to go in, and buy up control...[edit]

The power of the government to go in, and buy up control requires the ability to create money, to create money with the printing press. Because then wealth represents not work, but the control of the press. If you are going to get rich, there are only two ways you can, legitimately, honestly, get rich as an individual. One is by inheritance, the other is by work. By work that produces something.

Now the only way a government can get wealth, get the power that wealth affords, is through taxation, that is, the normal means. However if a government wants greater power, and socialism is a vast enhancement of federal power, it is necessary for it then to tamper with money. The Government does not work, the government by its very nature depends upon the work of others, and therefore its only way to have instant wealth, and therefore power, is its ability to create paper money. And therefore a socialist economy will be a paper money economy.

This is why Lenin was so vehement against the idea of gold, and he said: “When we become triumphant and we conqueror the world with Communism, we will take the gold and use it to line the public toilets because that’s all we’ll want it for.” He also said that: “nine tenths of socialism is the central banking system which can create paper money.” 9/10’s of Socialism. [Tape Ends] [00:38:36]