The Bank War

A cartoon lithograph praising Andrew Jackson for destroying the Second Bank of the United States, 1833

A cartoon lithograph praising Andrew Jackson for destroying the Second Bank of the United States, 1833

By 1832 the Second Bank of the United States, holding 30 branches, had become the most important financial institution in the nation. Operated by Philadelphia’s Nicholas Biddle, the bank became very powerful by assigning investment roles for each of its branches. The Bank of the U.S. regulated the lending of the state banks; national commercial and banking operations were led by a central bank in Philadelphia. A great many Americans hated the bank, especially farmers and land speculators who could not repay their loans after the agricultural market crashed following the Panic of 1819. Jackson had been one of those land speculators who had gone into debt in 1819, and he blamed the country’s financial problems on the bank. Jackson viewed the bank as undemocratic, and as an institution that stifled the opportunities of the common people. He accused the bank of oppressing hardworking people while making eastern financiers rich.

The bank had a renewable charter, which was scheduled to expire in 1836. Knowing its importance in the larger economy, Congress attempted to renew the bank’s charter early, in 1832, guaranteeing that a national bank would continue to exist. Most of Jackson’s political opponents knew that he disliked the bank and wanted it gone, but they did not believe he would do anything radical during an election year. Congress voted to renew the bank’s charter, as expected, but Jackson vetoed the continuation of a national bank, claiming that:

Two reproduction notes issued by the Pennsylvania-chartered Bank of the U.S., issued after the Second Bank of the United States charter lapsed in 1836

Two reproduction notes issued by the Pennsylvania-chartered Bank of the U.S., issued after the Second Bank of the United States charter lapsed in 1836

  • A national bank was a monopoly organization that deterred smaller state and independent banks from existing.
  • A national bank was unconstitutional. There was nothing in the Constitution about creating a national bank.
  • A national bank encouraged speculation and that led to an instable economy with frequent depressions and panics.
  • The rich used the bank to oppress the poor and continue the division of social classes.