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Jackson’s Fight With The ‘Money Power’
The third in a series on TIMES OF TRIAL IN AMERICAN STATECRAFT Old Hickory's attack on Biddle's bank had some unexpected consequences
June 1956 | Volume 7, Issue 4
There followed a century of exploitation from which America emerged with the most wealthy and powerful economy there is, with her people the best fed, the best housed, the best clothed, and the best equipped on earth. But the loss and waste have long been apparent. The battle was only for the strong, and millions who lived in the midst of wealth never got to touch it. The age of the Robber Barons was scarcely a golden age. It was scarcely what Thomas Jefferson desired.
It could scarcely have been what Andrew Jackson desired either, for his ideals were more or less Jeffersonian by common inheritance, and the abuse of credit was one of the things he abominated. Yet no man ever did more to encourage the abuse of credit than he. For the one agency able to exert some restraint on credit was the federal Bank. In destroying it, he let speculation loose. Though a hard-money devotee who hated banks and wanted no money but coin, he fostered the formation of swarms of banks and endowed the country with a filthy and depreciated paper currency which he believed to be unsound and unconstitutional and from which the Civil War delivered it in the Administration of Abraham Lincoln thirty years later.
This, of course, was not Andrew Jackson’s fault, unless one believes he would have done what he did had his advisers been different. Though a resolute and decisive person, he also relied on his friends. He had his official cabinet, largely selected for political expediency, and he had his “kitchen cabinet” for informal counsel. Of those advisers most influential with him, all but two were either businessmen or closely associated with the business world. The two exceptions were Major William B. Lewis, a planter and neighbor from Tennessee who came to live with him in the White House; and James K. Polk, also of Tennessee, later President of the United States. These two, with Jackson himself, constituted the agrarian element in the Jacksonian Administration. Several of the others, however, were agrarian in the sense that they had started as poor farm boys.
Martin Van Buren, probably the ablest of Jackson’s political associates, was a lawyer whose investments had made him rich. Amos Kendall, the ablest in a business and administrative sense, later made the telegraph one of the greatest of American business enterprises and himself a man of wealth. He provided the Jacksonians their watchword, “The world is governed too much.” He said “our countrymen are beginning to demand” that the government be content with “protecting their persons and property, leaving them to direct their labor and capital as they please, within the moral law; getting rich or remaining poor as may result from their own management or fortune.” Kendall’s views may be sound, but they are not what one expects to hear from the democracy when struggling with the money power.
Roger Taney, later Chief Justice, never got rich, but he liked banks and was a modest investor in bank stock. “There is perhaps no business,” he said as Jackson’s secretary of the treasury, “which yields a profit so certain and liberal as the business of banking and exchange; and it is proper that it should be open as far as practicable to the most free competition and its advantages shared by all classes of society.” His own bank in Baltimore was one of the first of the pets in which he deposited government money.
David Henshaw, Jacksonian boss of Massachussetts, was a banker and industrialist whose advice in practical matters had direct influence in Washington. Henshaw projected a Jacksonian bank to take the place of the existing institution but to be bigger. (A similar project was got up by friends of Van Buren in New York and one of the two was mentioned favorably by Jackson in his veto message as a possible alternative to the existing United States Bank.) Samuel Ingham, Jackson’s first secretary of the treasury, was a paper manufacturer in Pennsylvania and later a banker in New Jersey. Churchill C. Cambreleng, congressional leader of the attack on the Bank, was a New York businessman and former agent of John Jacob Astor. These are not all of the Jacksonians who were intent on the federal Bank’s destruction, but they are typical.
There was a very cogent reason why these businessmen and their class generally wanted to kill the Bank of the United States. It interfered with easy money; it kept the state banks from lending as freely as they might otherwise and businessmen from borrowing.
New York, for example, was now the financial and commercial center of the country and its largest city, which Philadelphia formerly had been. The customs duties collected at its wharves and paid by its businessmen were far the largest of any American port, and customs duties were then the principal source of federal income. These duties were paid by New York businessmen with checks on New York banks. These checks were deposited by the federal collectors in the New York office of the Bank of the United States, whose headquarters were in Philadelphia and a majority of whose directors were Philadelphia businessmen. This, Amos Kendall observed, was a “wrong done to New York in depriving her of her natural advantages.”
It was not merely a matter of prestige. As already noted, the United States Bank, receiving the checks of the New York businessmen, made the funds at once available to the secretary of the treasury. The Bank had therefore to call on the New York banks for the funds the checks represented. This meant that the New York banks, in order to pay the federal Bank, had to draw down their reserves; which meant that they had less money to lend; which meant that the New York businessmen could not borrow as freely and cheaply as they might otherwise. All this because their money had gone to Philadelphia.