Andrew Jackson and the Bank War

The validity of President Andrew Jackson’s response to the Bank War issue has been contradicted by many, but his reasoning was supported by fact and inevitably beneficial to the country. Jackson’s primary involvement with the Second Bank of the United States arose during the suggested governmental re-chartering of the institution. It was during this period that the necessity and value of the Bank’s services were questioned.

The United States government in 1816 chartered the Second Bank of the United States. It had a 20-year charter, which was to expire in 1836. Despite this, the Bank was privately owned and during the age of Jackson, the president was Nicholas Biddle. The Bank was large in comparison to other banks, being responsible for 15-20% of bank loans in the United States and accounting for 40% of the bank notes in circulation. Also, the Bank held a specie reserve of 50% of the value of its notes, when normally other banks only had a specie reserve of 10-25% (Davis 1).

In addition to the powerful coordination the Bank possessed, it influenced interest rates for loans to the working class and the rate of inflation in the nation. Because of the use of various bank notes, variegating from bank to bank due to the lack of national currency and mixture of specie, people trusted that each bank would be able to “cash in” their bank note for specie. This did not always hold true, but the Second Bank of the United States was the most trusted of the banks to supply specie in exchange for their bank notes. Because of this most people, in order to protect themselves from losing money, would exchange state bank notes for notes issued by the Second Bank. However, this meant that the Second Bank could threaten the state banks by demanding more gold, which might cause for their bankruptcy. As a result, the state banks were pressured into not being able to over issue their bank notes, which inevitably decreased their importance and power in the nation by decreasing the circulation of their bank notes. This was the greatest argument posed by the leaders of the state banks against the Second Bank of the United States (Roughshod 2).

Despite the oncoming bankruptcy of the state banks, prior to Jackson’s administration the government did not show much support in their survival. In fact, the government played a large role in the functioning of the Second Ban...

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...lso difficult to relate to Jackson’s actions, since other factors occurring during the post- 1834 time period also affected the panic and not just the down fall of the Second Bank. Therefore, Jackson’s anti- bank views were not simply based on personal prejudice, the Second Bank had many questionable principles that had to be terminated.

Bibliography

1) Adams, James Truslow. The March of Democracy: Vol. II A Half-Century of

Expansion. New York: Charles Scribner’s Sons, 1933.

2) Davis, Gareth. The Destruction of the Second Bank of the United States Rationale and

Effects.

3) The First Roughshod President: The Jackson Presidency: Domestic Affairs.

4) The Gilder Lehrman Institute of American History. The Bank War. 2001.

5) Hofstadte, Richard. Vol. II Great Issues In American History. New York: Vintage

Books, 1958.

6) Schlesinger, Arthur M. The Age of Jackson. Boston: Brown and Company, 1953.