Jackson and the Bank Battle

The war on the Second Bank of the United States can be described as one of the most controversial aspects of President Andrew Jackson's two terms in the office. President Jackson used his presidency to destroy the Second Bank of the United States and many government powers and institutions were affected by the methods and principles he acted upon.

The idea for a Bank of the United States or a National Bank was conceived by Alexander Hamilton, Secretary of Treasury under President George Washington (Remini, "Andrew Jackson and the Bank War," 23). It was originally supposed to serve as a central fiscal system for the nation where the government would deposit money and appoint five of the twenty five board members, in an attempt to provide some sort of government regulation and representation in this new bank. Most of the bank's business would be private and it would be privately run (Remini, "Andrew Jackson and the Bank War," 24). The biggest problem with the banking system of the time was the discrepancy between paper money and "hard money," which is the bimetallic system of gold and silver (Remini, "Andrew Jackson and the Bank War," 25). This led to the challenge of issuing different bank notes at different state branches; the amounts were not always the same and it caused a problem with knowing which medium of exchange was correct (Remini, "Andrew Jackson and the Bank War," 25). The charter on the First Bank of the United States expired in 1811 but, due to financial troubles after the War of 1812, James Madison chartered the Second Bank of the United States on May 10, 1816 (Remini, "Andrew Jackson and the Bank War," 26).

The new bank had a capital stock of thirty five million dollars, as opposed to the ten million dollars of stock that the first bank had. The original President of the new bank was Captain William Jones, who proved to do little to help the bank in its beginning. After him came Langdon Cheves, who saved the bank during a financial panic in 1819 but left the people in a state of depression, especially those in the "West where political repercussions reverberated for almost ten years (Remini, "Andrew Jackson and the Bank War," 28). The third and final president of the bank was Nicholas Biddle. He would stay on and fight for the bank until its last days.

Biddle served as a strong administrator for the bank and it enjoyed prosperity and financial strength under his direction. However, Andrew Jackson disagreed with the idea of a privately owned national bank and wanted to change or destroy it. The entire "Bank War" started out as a political battle, that is to say, the bank was exercising political influence over Congressmen as well as discriminating in the way of loans in its state branches (Remini, "Andrew Jackson," 141). In his first address to Congress in 1829, Jackson mentioned his dislike for the bank and this sparked the initial battles. The issue stayed fairly quiet during most of Jackson's first term until Biddle requested that the bank be rechartered in 1832, four years before its original charter was to expire (Remini, "Andrew Jackson," 147). This set of the war in full force because it was an election year and this bill is one that Jackson would not want to address in his campaign (Remini, "Andrew Jackson," 147). In the end, Jackson decided to veto the bill for recharter. Not surprisingly, the veto caused a stir in Congress as well as with the people. In the veto message, Jackson asserted his disagreement with the ruling in the McCulloch v. Maryland court case, in which Justice Marshall had ruled in favor of the bank on the grounds that it was constitutional under the "necessary and proper clause." Biddle put a great deal of money into Henry Clay's campaign, Jackson's opponent, while Jackson and the Democrats focused on Jackson himself as a hero and a charismatic personality and screened the bank issue as much as possible (Remini, "Andrew Jackson," 152).

Jackson won the election but lost a number of popular votes, an incident that was thus far unprecedented in American history (Remini, "Andrew Jackson," 154).

Throughout the rest of his presidency, Jackson worked to destroy the Second Bank of the United States. In 1833, Jackson removed the government deposits that comprised one-fifth of the bank's holdings and distributed them to banks in different states that had been previously scouted by Amos Kendall, a supporter of Jackson (Remini, "Andrew Jackson," 156-158). He felt that the government money would be better off in a deposit banking system, rather than a central, privately run fiscal system. Biddle did not comply. Instead, he ordered "a general curtailment of loans throughout the branches of the B.U.S., an order of such sudden constriction that the country was thrown in to an economic panic reminiscent of 1819" (Remini, "Andrew Jackson," 158). At this time, Jackson was also trying to push "hard money" bill that would ensure all transactions would be done with gold or silver, rather than paper money. This was not popular and was hurtful to Jackson and to the Democratic Party, which was already dividing into different segments, including the Whigs party. It is during this time that the Bank War was the most disorderly and chaotic. However, the bank was continuing to lose its economic footing and would soon collapse (Remini, "Andrew Jackson," 159). Congress then passed a resolution saying that the removal of the deposits was "unsatisfactory" and a censure stating the removal "a misuse of presidential power" (Remini, "Andrew Jackson," 163). Jackson protested both of these and the Senate later expunged them. Jackson managed to rally his party in Congress and in the population and eventually defeated Biddle and the Second Bank of the United States (Remini, "Andrew Jackson," 164,167).

The main issue that is prevalent throughout this entire situation is the power struggle between Andrew Jackson and Nicholas Biddle. President Jackson misused the presidency for personal interests and passions, and that misuse infringed upon the powers of other government functions. It is also true, however, that the Second Bank of the United States had privileges that could have led it to encroach on the power of the government which made it necessary to check those powers.

The framers of the Constitution concentrated a great deal on the distrust of power, relating to both people and government. In this case, Jackson highly distrusted the bank and its political power. Since the bank had explicit ties to the government through various Congressmen and through the Treasury itself, it was necessary

...