Fay History 7 Monroe Events

• - Monroe was Sec. of State and Sec. of War
• - Crawford was a cabinet member, a strong Senator but no national experience

· The newly industrialized economy brings with it the “BOOM – BUST” cycle.

• · For the most part, War is the catalyst (creator of a reaction) for driving the cycle… it can push it into “BUST” because of post-war
• debt and unemployment/inflation… it can push it into “BOOM” as people work to produce war goods, increasing their savings and purchasing power.

· There are 3 sure signs of a financial panic – all of which occurred in 1819:

1. Purchasing power is DOWN and price is DOWN

2. Banks have lent too much, have collected too little and are forced to close their doors

3. Staple products (agricultural products and “American” industries) and in large supply, but demand and price are so low that the products don’t turn a profit.

· Monroe’s America is getting killed because of debt, which cannot be paid back.

· Monroe decides to forgive all mortgage payments for land bought from the Federal Government.

The Panic of 1819 gradually ends as industrialization takes off.

· During the panic several banking issues were brought into the light, as banks tried to revive the economics of states that were hit hardest by the panic.

· The 2nd National Bank which was re-chartered now had branches in each state and was printing national currency.

· State banks continued to issue loans (both in-state and out-of-state) and printed their own currency.

· Maryland’s bank was losing money because of loans that were being taken out of banks in neighboring states… not to mention that Federal Currency was being used in the large trading centers like Baltimore.

· In order to make money for the struggling state, the State government decided to tax all forms of Federal currency, as well as all other state currencies being used by Maryland business and residents.

· The decided to tax the pay of one James McCulloch, whose paychecks came from the Second bank of the US, in the form of Federal currency… McCulloch refused to pay the tax (unconstitutional)

· Maryland takes him to court and wins in District Court… McCulloch appeals to Marshall and the Supreme Court.

· Maryland claims that the Second National Bank in unconstitutional and that not paying your taxes is a crime.

• · Marshall rules that
• (A) the 2nd Nat. Bank is constitutional,
• (B) the tax on McCulloch, Federal currency, and other state currencies is unconstitutional,
• (C) the Federal level of government ALWAYS outweighs the state on matters that are NOT state’s rights… in this case TAXATION!!

· With the House of Reps and the Senate at nearly at a deadlock between support for slavery and opposition to the institution, requests for statehood threatened to shift the power to one side.

· In 1820, Missouri’s petition came before Congress as s slave state; therefore upsetting the balance.

· Congressman James Tallmadge Jr. of New York (free state) opposed Missouri’s petition, but would allow it under 2 conditions.

• 1. No new slaves (purchased or brought) would be allowed in Missouri from then on.
• 2. All slaves born in Missouri after the date of admission who be emancipated (set free) after their 25th birthday

· If Tallmadge’s bill was supported, the once slave state of Missouri would soon be free.

· Because of a small majority in the Senate, his bill is killed… a COMPROMISE must be struck.

• · The Missouri Compromise (devised mostly by Henry Clay) stated
• (A) Missouri would become a slave state while Maine (North Massachusetts) would become a free state [balance in Congress secured]
• (B) the 36-30 line would now mark the division of the North from the South in and ONLY in the Louisiana Territory [all new states south of the line would be slave and all new states north wouldbe free].

· Maryland gets its state nickname “the old line state” as the once used Mason/Dixon Line is no longer the assumed middle of the country.

• · Five former colonies of Spain declare independence – Peru, Chile, Argentina, Mexico, Columbia

· The British, fearing that European nations (like France) might pray on these weak new nations comes to Monroe with the idea of a pledge to go to war with any country who tries to take land or to get involved with issues within the Americas (North, Central, or South).

· Monroe had his own issues to worry about with nations taking land, as it was clear to him that Russia was a real threat to the Pacific North West (Alaska – Northern Cali.).

· The two countries agree to support a US made policy that declared the Western Hemisphere off limits to all European nations (Russia included)

· The audacity shown by the US was unmatched, as only Britain signed and agreed to the doc.

· However, the threat of war against the US and Britain kept everyone away… it works!

• · Four candidates run for the Presidency in 1824 – all Democratic Republicans

· J.Q. Adams was the most qualified, Clay was the most politically capable, Crawford was the most respected, and Jackson was the most revered (war hero).

· Crawford suffers a stroke before the election, but is so well respected he is kept in the race

· After the elector vote there was NO winner: JQA– 84, AJ – 99, WC – 41, HC – 37

· The election was now thrown to the House of Reps… where Henry Clay was the Speaker of the House (CONFLICT OF INTEREST?).

· The Constitution stated that only the top three vote getters go into the second election – Clay out.

· Now Clay led the election process, and began to rally support for Adams, whose ideas and policies most closely mirrored his own.

· NOT COINCIDENTALLY – when Adams wins the election, even though Jackson won the popular, Henry Clay becomes the new Sec. of State.

Jackson claims it was a “corrupt bargain”…newspapers agree… Adams bought the election!