The Nullification Crisis came about in 1832 after South Carolina declared that the Federal Tariffs signed into law by President Andrew Jackson were unconstitutional.
After the national economy began to fall, South Carolina found itself hardest hit due to tariffs placed by the federal government during the War of 1812. South Carolina convened and declared that all such tariffs were unconstitutional and therefore null inside state boundaries. This was a direct threat to the federal government's power over national issues, and President Jackson responded by first initiating a Force Bill, allowing military action against South Carolina in the event of non-compliance -- this in itself an unprecedented act -- and then, after public outrage led by Presidential hopeful Henry Clay, who also introduced a Compromise Bill to settle the issue, South Carolina repealed their Nullification Act, and the Compromise Bill was passed by Congress.
Jackson's move to military force in the face of this crisis was both decisive and divisive, as it alienated Southern interests while uniting the federal government against state-independence. Ultimately, Jackson's initial refusal to compromise, only mitigated by the populist rhetoric of Henry Clay, was an integral step on the path to the U.S. Civil War.
For more information on the nullification crisis, check out this lesson:
Prior to the Force Bill, President Andrew Jackson responded to the Nullification action of South Carolina by issuing a Nullification Proclamation. In his proclamation, Jackson stated that Nullification of a federal law by a state was:
Incompatible with the existence of the Union, contradicted expressly by the letter of the constitution, unauthorized by its spirit, inconsistent with every principle for which it was founded, and destructive of the great object for which it was formed
He also told the people of South Carolina that they should not follow false leaders:
The laws of the United States must be executed....Those who told you that you might peaceably prevent their execution deceived you; they could not have been deceived themselves....Their object is disunion
He further stated that any attempt to sever the union by armed force would constitute treason.
Although Jackson did secure a Force Bill from Congress, he did not believe that he needed the blessing of Congress to act;as President he was charged with the responsibility to enforce the law, and this would include the Tariff. He sent troops under the command of General Winfield Scott to South Carolina to enforce the tariff, and armed combat appeared inevitable, as South Carolina Governor Robert Hayne had called up the state militia to resist any federal "invasion." Jackson actually signed the Compromise Tariff proposed by Henry Clay on the same day that he signed the Force Bill, March 2, 1833. South Carolina, in order to give the appearance that it had not backed down, passed a resolution declaring the Force Bill null and void, and the crisis was ended in such a way that both sides to claim to have won.