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Andrew Jackson's War Against the Second Bank of the United States
The American Spirit
In the election year of 1832, President Andrew Jackson delivered one of the most powerful vetoes in US history
The Constitution of the United States, written in 1787 and ratified the following year, is the longest surviving active charter in the history of the world. The brilliance of the document is embodied in the fact that it laid out exactly what a centralized government could—and, more importantly, could not—do.
To protect the sovereignty of the nation, for example, the federal government had the power to maintain a standing army. But the Founders were very keen to assure power resided at the lowest possible level, assuring the rights of the individual were not trampled by a draconian central authority.
During his presidency, President Barrack Obama lamented the fact that the Constitution was a set of “negative rights,” outlining what the federal government could not do rather than what it could do. Statements such as this, from the leading individual authority of the time, illustrate the foresight and brilliance of the Founders.
The authors of the Constitution were acutely aware of the inclination of individuals in power to become so comfortable in their position that abuse of power, at the expense of individual rights, was almost a given. It is fair to say that the entire document was written with this in mind, and this revolutionary contract for the young nation would serve as a master guardrail to prevent such abuse.
It is human nature for individuals to see things through the prism of the contemporary world, failing to understand that most modern-day conditions are anything but unique. Hence, the oft-repeated argument by many that the Founders could not possibly foresee—let alone plan for—what would transpire long after they were gone. But their collective prescience, shaped by an extensive understanding of history, was nothing short of remarkable. They understood that history repeated itself, and that humans would continue to act in a predictable manner.
Take the modern power struggle between those who believe that only a central government can manage the needs of a population, and those who believe power should reside at the lowest possible level. That precise battle was raging 200 years ago, as evidenced by Andrew Jackson’s war on the Second Bank of the US.
The Hamiltonian Second Bank receives its first charter
It would probably come as a surprise to most that the Second Bank of the United States, given a 20-year charter by Congress in 1816, was actually a private corporation. While accountable to the US Treasury, it was anything but a bank of the people.
The bank’s primary shareholder was the federal government, with several thousand wealthy Europeans and several hundred wealthy Americans owning virtually all of its shares. The bank was responsible for handling the fiscal transactions of the government, and for helping to assure the access to capital for continued economic growth.
Despite being built upon the concept of a meritocracy, the US more resembled an aristocracy in the early 19th century. That was certainly the case with respect to the Second Bank, which loaned virtually no money to “average” Americans or small business owners, and the attitude of its pompous president, Nicholas Biddle. But a seismic shift was about to rock the country.
The first outsider to become president
For the entire forty year period following George Washington’s first election in 1788/89, presidents hailed from the seats of power at the time; namely, Virginia and New England. That template was shattered in 1828 with the election of Andrew Jackson.
It wasn’t just that Jackson, who soundly beat establishment darling and incumbent president John Quincy Adams, was from the frontier that shook the powers that be, it was his radical talk of empowering ordinary Americans from the middle and lower classes of society. America may have been founded upon the principles of individual rights, but the working class “rabble” was barely taken into consideration by the ruling elites like Adams.
Imagine the shock waves felt throughout Washington after nearly 650,000 voters—roughly 60% of the total—cast their ballots for the interloper. Did Jackson arouse passion amongst the electorate? The 1828 election brought out nearly twice as many voters as had the previous election in 1824. And Jackson’s radical talk was not a hollow campaign ploy, as his detractors would soon find out.
Jackson’s opponents make a terrible miscalculation
President Andrew Jackson’s support for the common man wasn’t academic, it was personal. From early in his career he had faced financial hardship, and he squarely placed the blame on banking institutions which he saw as merely a tool for the wealthy.
Despite his experience-based leanings, Jackson was not overtly antagonistic toward the Second Bank of the United States—at least initially. In a wonderful piece of historic irony, it was his detractors—a group which vehemently hated the president and strongly supported the bank—who ultimately sealed the bank’s fate.
Bank president Nicholas Biddle had a brilliant mind and the arrogance to go with it. As is often the case, his strong intelligence came at the expense of his ability to deal with others; namely, his political savvy was lacking. He was almost the inverse of Jackson, whose intelligence level was constantly being (unfairly) impugned by his political enemies, but who possessed a dynamic personality which drove them crazy. His connection with the American people was undeniable.
In the election year of 1832, Biddle joined in an unholy alliance with Jackson’s enemies in the US Senate, first among them being Henry Clay of Kentucky. In a move that lived up to his moniker of “Tsar Nicholas,” Biddle actually used thousands of dollars of bank money to try and defeat Jackson in his reelection bid. This move was an enormous political gift for the adroit president, who provided it as evidence that the bank was tainted and simply a tool for the ruling elite.
In the senate, Clay was making his own miscalculation. Even though the bank’s 20-year charter was not up until 1836, he applied for its re-charter four years early, believing Jackson would not be so bold as to veto it in the midst of his reelection battle. A rather remarkable gambit, considering “Old Hickory’s” storied career.
Being painted into a corner like this enraged Jackson, who railed against the bank’s “rag money” (fiat currency not backed by hard assets such as gold and silver) and questioned the very constitutionality of the institution. Forced into action by Biddle and Clay, Jackson issued his rallying cry to his faithful vice president, Martin Van Buren: “The bank is trying to kill me, Sir, but I shall kill it!” To a delegation of bankers urging the re-charter, Jackson was even more blunt: “You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out.”
The bank is trying to kill me, Sir, but I shall kill it!
The end of the bank and a rousing election victory
Biddle’s political missteps didn’t end when he joined forces with Clay for the early re-charter push. He arrogantly ordered thirty thousand copies of Jackson’s veto message to be printed up and disbursed to help Clay win the presidential election. On the campaign trail— another odd move for a “nonpartisan” banker—Biddle proclaimed, “This worthy president thinks that because he has scalped Indians and imprisoned judges he is to have his way with the Bank. He is mistaken.”
The result of Biddle and Clay’s slick maneuver? Andrew Jackson and Martin Van Buren went on to win a landslide victory, pulling 219 electoral votes to Clay’s 49, and winning 16 of the 22 states. Jackson’s new Secretary of the Treasury, Roger B. Taney, withdrew all public funds from the bank— effectively killing it—and placed the proceeds in the state banks.
Today, Americans decry the charged political atmosphere. It is important to understand the issues, however, and to realize that this level of intensity is a natural byproduct of a vibrant republic.
