What, however, would take the Bank’s place? Two very different groups applauded Jackson’s veto—state bankers who wished to free themselves from Biddle’s regulations and issue more paper currency (called “soft money”), and “hard money” advocates who opposed all banks, whether chartered by the states or the federal government, and believed that gold and silver formed the only reliable currency.

During Jackson’s second term, state bankers were in the ascendancy. Not content to wait for the charter of the Bank of the United States to expire in 1836, Jackson authorized the removal of federal funds from its vaults and their deposit in local banks. Not surprisingly, political and personal connections often determined the choice of these “pet banks.” The director of the Maine Bank of Portland, for example, was the brother-in-law of Levi Woodbury, a member of Jackson’s cabinet. A justice of the Supreme Court recommended the Planters Bank of Savannah. Two secretaries of the Treasury refused to transfer federal money to the pet banks, since the law creating the Bank had specified that government funds could not be removed except for a good cause as communicated to Congress. Jackson finally appointed Attorney General Roger B. Taney, a loyal Maryland Democrat, to the Treasury post, and he carried out the order. When John Marshall died in 1835, Jackson rewarded Taney by appointing him chief justice.

Without government deposits, the Bank of the United States lost its ability to regulate the activities of state banks. They issued more and more paper money, partly to help finance the rapid expansion of industrial development in New England, agriculture in the South and West, and canal and railroad systems planned by the states. The value of bank notes in circulation rose from $ro million in 1833 to $149 million in 1837.

Prices rose dramatically, and even though wages also increased, they failed to keep pace. As a result, workers’ “real wages”—the actual value of their pay—declined. Numerous labor unions emerged, which attempted to protect the earnings of urban workers. Speculators hastened to cash in on rising land prices. Using paper money, they bought up huge blocks of public land, which they resold to farmers or to eastern purchasers of lots in entirely nonexistent western towns. States projected tens of millions of dollars in internal improvements.

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