Second National Bank and Andrew Jackson's Bank War

Andrew Jackson's presidency was marked by a significant conflict with the Second National Bank, which he ultimately vetoed in 1832. The bank's charter was set to expire in 1836, but Jackson saw it as a threat to state banks and the economy.

The Second National Bank was established in 1816 to stabilize the national currency and provide a safe and stable banking system. It was a private bank that issued currency and provided loans to the government.

Jackson's opposition to the bank was rooted in his belief that it favored the wealthy elite and was not serving the interests of the common man. He believed that the bank's policies were stifling economic growth and hurting the economy.

Jackson's veto of the bank's re-charter sparked the Bank War, a period of intense conflict between the president and the bank's supporters. The veto was a significant victory for Jackson and his supporters, but it also had far-reaching consequences for the economy and the country.

The establishment of the Second Bank of the United States was rooted in the early 19th century transformation of the country from agrarianism to industrialization and finance. This transformation created a need for a national banking system to provide security for government bonds and establish fiscal order.

The federal government suffered from an unregulated currency in the aftermath of the War of 1812, prompting business interests to seek a national bank. The Era of Good Feelings, a period of national programs and institutions, favored the development of a protective tariff, internal improvements, and the revival of a Bank of the United States.

The charter for the Second Bank was signed into law by James Madison on April 10, 1816, with a $35 million fund.

The establishment of a national banking system was rooted in the early 19th century transformation of the country towards industrialization and finance. The federal government suffered from an unregulated currency and lack of fiscal order after the War of 1812.

The Era of Good Feelings, a period of favorable political climate, led to the development of national programs and institutions, including a protective tariff, internal improvements, and the revival of a Bank of the United States.

Southern and western support for a bank, led by Republican nationalists John C. Calhoun of South Carolina and Henry Clay of Kentucky, was decisive in the successful chartering effort. The charter was signed into law by James Madison on April 10, 1816.

The Second Bank building was described by Charles Dickens in a chapter of his 1842 travelogue American Notes for General Circulation, Philadelphia, and its solitary prison.

The early United States was a time of great controversy over banking, currency, and monetary policy. This led to a significant split within George Washington's administration.

Alexander Hamilton was a key figure in establishing the original Bank of the United States in 1791. He was the mastermind behind it, and it was approved by Congress.

The original Bank's charter expired in 1811, but the nation's financial struggles during the War of 1812 led to the creation of the Second Bank of the United States. Congress chartered it for 20 years starting in 1816.

The Second Bank was funded with a massive $35 million, a huge sum at the time. This significant investment helped the Bank to eventually build a solid reputation.

Under the leadership of Nicholas Biddle, the Bank's third president, it established a strong reputation by the end of the 1820s.

The Second National Bank was a national bank that played a significant role in the US economy during its time, but it didn't quite live up to modern central banking standards. It didn't set monetary policy, regulate private banks, or act as a lender of last resort.

The bank was launched in 1816, in the midst of a major global market readjustment, and its primary goal was to restrain private bank note issue and prevent a credit bubble. However, under the management of its first president William Jones, the bank failed to control paper money issued from its branch banks in the West and South.

This led to a speculative land boom, which ultimately contributed to the Panic of 1819, a global economic adjustment that caused mass unemployment and plunging property values. The bank's reaction to the crisis was clumsy, resulting in a protracted recession that lasted until 1822.

Here's a brief timeline of the bank's economic functions and impact:

The bank's failure to control paper money and its clumsy reaction to the crisis led to widespread disaffection among the American public, ultimately contributing to the bank's demise.

The Second Bank of the United States was a national bank that failed to serve the functions of a modern central bank. It didn't set monetary policy, regulate private banks, hold their excess reserves, or act as a lender of last resort.

The bank was launched during a major global market readjustment after the Napoleonic Wars, and its primary goal was to restrain the private bank note issue that threatened to create a credit bubble. This was a major concern, as the government land sales in the West fueled a speculative bubble.

Under its first president, William Jones, the bank failed to control paper money issued from its branch banks in the West and South, contributing to the post-war speculative land boom. This was a significant issue, as it led to the Panic of 1819, which was a result of global economic adjustments.

The bank's reaction to the crisis was a clumsy expansion, followed by a sharp contraction of credit, which had catastrophic effects on the economy. This led to a protracted recession with mass unemployment and a sharp drop in property values that persisted until 1822.

The bank's failure to control the economy led to widespread disaffection among the American public, raising doubts about the efficacy of paper money and the interests of a national system of finance. This disaffection would later be used by the anti-bank Jacksonian Democrats to mobilize opposition to the bank in the 1830s.

Nicholas Biddle, the third and last president of the bank, was appointed in 1823 and guided the bank into a powerful institution that produced a strong and sound system of national credit and currency. He expanded credit steadily, but with restraint, serving the needs of the expanding American economy.

Here's a brief timeline of the bank's evolution:

The bank's evolution into a powerful institution was marked by a shift in its approach to credit and currency, which ultimately led to its downfall.

The Second Bank of the United States was established to breathe life back into the economy, but it ended up causing more harm than good in its early years.

Its first president, William Jones, was a Philadelphia merchant and politician backed by businessmen in Baltimore eager to tap the Bank's wealth.

The Bank lent aggressively to merchants and land speculators, and gave sweetheart loans secured by the Bank's own stock to Jones' associates.

One of the recipients of these fraudulent loans was Baltimore Cashier James W. McCulloch, who was later immortalized in a landmark U.S. Supreme Court case.

The Second Bank's profligate lending weakened it, and its failure to persuade state banks to resume specie payments caused paper currency to depreciate.

The Bank's efforts to save itself during the Panic of 1819 worsened the economic downturn, causing widespread bank and business failures.

The Bank's actions during the Panic sowed the seeds of its later destruction, as it repossessed people's livelihoods in the west and created permanent enemies.

Jackson's opposition to the Bank became almost an obsession, and he vetoed the Bank Recharter Bill in 1832. He also ordered the federal government's deposits removed from the Bank of the United States.

In response, Biddle restricted the Bank's loans, tightening the nation's money supply in an effort to inspire public outrage toward Jackson's policies. This plan backfired, and the ensuing financial distress inspired greater suspicion of the Bank's power.

The Bank War continued, with Jackson's opponents organizing the Whig Party in 1834. The Whig-dominated Senate formally censured Jackson for removing the federal deposits, but Jackson's supporters later removed the censure from the Senate record.

Here's a list of the Bank's presidents during the relevant time period:

In 1836, the Bank's charter expired, and it became a private corporation under Pennsylvania law. This marked the end of the Bank's regulatory role and led to a shortage of hard currency, causing the Panic of 1837.

The Panic of 1837 was a financial crisis that hit the United States, triggered by the removal of the Second Bank of the United States as a regulating force. This led to state banks printing currency and lending money in excess, causing high inflation.

High inflation and President Jackson's policies favoring hard currency led many investors to panic and banks to close due to insufficient reserves. Many banks were forced to shut down as a result.

The crisis was a direct consequence of the Second Bank of the United States charter expiring in 1836, and its replacement by a state-chartered bank. President Jackson's goal of separating the nation's finances from its government was further pursued by his successor, Martin Van Buren.

The Independent Treasury Act, proposed by Van Buren, aimed to achieve this goal by establishing a new independent treasury system.

The Bank War ended with the Bank of the United States losing its federal charter in 1836, and Nicholas Biddle, its president, was left with a private corporation under Pennsylvania law.

Biddle's tactics to extort a rescue of the bank caused a short-lived financial crisis that was initially blamed on President Jackson's executive action.

The bank suspended payment from October 1839 to January 1841, and permanently in February 1841.

The bank's liquidation process, complicated by lawsuits, ended in 1852 when it assigned its remaining assets to trustees and surrendered the state charter.

Here's a list of the Bank of the United States' presidents:

The Second Bank's regulatory mechanisms were designed to restrain the proliferation of paper money by state or private lenders, which was highly profitable for these institutions. This was a primary task of the bank, as chartered by Congress in 1816.

The bank would preside over the democratization of credit, contributing to a vast and profitable disbursement of bank loans to farmers, small manufacturers, and entrepreneurs, encouraging rapid and healthy economic expansion.

Receiving the checks and notes of local banks deposited with the bank by government collectors of revenue, the bank had constantly to come back on the local banks for settlements of the amounts which the checks and notes called for.

This mechanism automatically regulated local banking lending by requiring local banks to maintain adequate gold and silver reserves to meet their debt obligations to the U.S. Treasury.

The local private banks found this mechanism objectionable because it yoked their lending strategies to the fiscal operations of the national government.

The proliferation of private-sector banking institutions from 31 banks in 1801 to 788 in 1837 meant that the Second Bank faced strong opposition from this sector during the Jackson administration.

Nicholas Biddle and the Bank was a significant figure in the establishment of the Second Bank of the United States. He was appointed as its president in 1823.

Biddle was a strong supporter of the bank and its mission to stabilize the national currency. He believed that a central bank was necessary to manage the country's finances.

The bank's charter was set to expire in 1836, but Biddle was determined to extend it. He lobbied Congress to renew the charter, which was a contentious issue at the time.

Biddle's efforts to extend the bank's charter led to a confrontation with President Andrew Jackson, who vetoed the bill. Jackson saw the bank as a threat to state power and believed it was unconstitutional.

Despite the veto, Biddle continued to push for the bank's renewal. He argued that the bank was essential to the country's economic stability and that its failure would have catastrophic consequences.

The bank's charter ultimately expired in 1836, and it was not renewed. This marked the end of the Second Bank of the United States and the beginning of a new era in American banking.

Jackson's veto of the recharter bill was a pivotal moment in the Bank War, as it directly contradicted the 1819 Supreme Court ruling in McCulloch v. Maryland, which held that the Bank of the United States was constitutional.

The Bank's charter gave the institution too much power over the nation's financial markets, enabling it to generate huge profits for its stockholders, most of whom were "foreigners" and "our own opulent citizens."

Jackson's veto message claimed that the Bank created a privileged class of Americans with too much money and political power, which was unjust and dangerous to "the humble members of society—the farmers, mechanics and laborers—who have neither the time nor the means of securing like favors to themselves."

Despite steadfast support from Clay and Daniel Webster, the recharter bill did not have the two-thirds majority support necessary to override Jackson's veto.

The battle over the Bank became a central issue in the presidential campaign that year, in which Jackson soundly defeated Clay to win a second term.

Here is a list of the presidents of the Second Bank of the United States: