Which of the following is true of the "Bank War" over the Second Bank of the United States?
After Jackson destroyed the Bank of the United States,
a. the economy finally flourished and expanded.
b. was repaired and the state banking system created a new level of prosperity.
c. quickly collapsed into depression.
d. went through all of the above.
Of the choices given here, C is the best choice. There is no way of being sure that Jackson’s destruction of the Second Bank of the United States caused the Panic of 1837. However, it seems clear that destroying the bank did hurt the economy.
After the federal government withdrew its money from the Bank of the United States, many state banks arose and printed large amounts of money. This led to rapid inflation and to a bubble in land values as speculators used the easy money to buy land. This bubble led to a collapse and the Panic of 1837 ensued a mere 3 or 4 years after the Bank War ended.
If your textbook or teacher sees this bubble as evidence of economic expansion and prosperity, D might be the right answer. However, most historians do not see the bubble that way and C is the best choice.