The Bank War

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Biddle did nothing to placate the new administration. Rumors spread that Bank branch directors in New Hampshire, Kentucky, and Louisiana had used their money and influence to back anti-Jackson candidates in 1828. When Jackson directed a cabinet officer to ask Biddie for an investigation (and recall that the United States was a stockholder in the Bank), Biddle’s refusal was unambiguous. He and his directors acknowledged “not the slightest responsibility of any description whatsoever to the Secretary of the Treasury touching the political opinions and conduct of their officers.” Jackson was not a man to take lightly a command to mind his own business. He soon let it be known that he wanted Congress to consider possible alternative arrangements for the country’s fiscal affairs, but he did not make a flat commitment to block a renewal of the Bank’s charter, for he did not want to face the issue in an 1832 campaign for a second term.

But Biddle then unwisely took the offensive. If Jackson chose to fight, he said, “he may perhaps awaken a spirit which has hitherto been checked & reined in.” Biddle subsidized pro-Bank newspapers, speakers, and candidates, and succc’eded in having a recharter bill introduced in 1832. The measure passed the Senate 20-8 and the House 107-85.

But he had turned from a mere opponent into a mortal enemy of Andrew Jackson, a role that few survived. “The Bank,” Jackson told Martin Van Buren in May 1832, “is trying to kill me, but I will kill it.” He pounced on the opportunity to use the veto power rarely- employed by the six previous Presidents (only ten times, all on constitutional grounds), and his veto message was a rallying cry for what historians came to call “Jacksonian democracy.” The Bank became a symbol for anti- Americanism, for the arrogance of privilege and the corrupting influence of money. Eight million of the Bank’s stock privately held was in the hands of foreigners. Recharter would boost its value, so by the bill “the American Republic proposes virtually to make them a present of some millions.” And as the recharter bill showed, “the rich and powerful too often bend the acts of government to their selfish purposes.”

Some historians charge that Jackson was demagoguing. The foreign-held stock did not have voting rights and the twenty million dollars held by Americans (excluding the government’s seven million) were, according to one scholar, “widely distributed and actively traded.” What is more, anti-Bank voters were not all commoners; many were themselves capitalists who wanted the Bank’s chokehold on credit broken for their own selfish advantage. Nonetheless, the message was a landmark use of presidential power. Jackson had ranged himself as champion of the entire American people against what a later popular President (FDR) would call economic royalists. He had also managed to take on Congress itself and indirectly the Supreme Court.

The veto was upheld, and what was more, Jackson was re-elected. But the war wasn’t quite over. Jackson was now determined not to wait until the charter expired. He ordered that the government’s deposits be removed from the Bank and distributed to state banks of his choosing. It was a highly questionable action under the law, and the Senate voted to censure him for it. Then Biddle retaliated, saying: “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.”

Biddle had the Bank curtail loans throughout the nation—they went down by eighteen million dollars in a few months—and demand the immediate redemption of state bank notes in specie as fast as possible. He hoped to create a depression that would show America what it was losing if the Bank went down. But once more he had miscalculated. The hard times following the contraction turned people against the Bank, not against Jackson, and his handpicked successor, Van Buren, won the election of 1836. Jackson exulted: “I have obtained a glorious triumph … and put to death, that mamouth of corruption.”

On a personal level Biddle was the heaviest loser. After 1836 he got the Bank chartered to operate in Pennsylvania but then indulged in some questionable speculations to sustain its solvency. He was forced to resign under a cloud in 1839, was sued by irate stockholders, and was even arrested on a criminal conspiracy charge but later freed. He died in 1844 at the age of fifty-eight. Jackson, though nineteen years his senior, had the satisfaction of outliving him by a year.

Some contemporary economists think that Biddle was right on the issue if wrong on the tactics. Without a central bank like those of European powers, the United States struggled through a series of booms and busts during much of the nineteenth and early twentieth centuries. But whether or not that is true, the question that Jackson raised —how to control the power generated when big government and high finance become partners instead of adversaries —is still very much alive.