Anti-Bank Jacksonian Democrats were mobilized in opposition to the national bank’s re-authorization on the grounds that the institution conferred economic privileges on a small group of financial elites, violating Constitutional principles of social equality. When Congress voted to reauthorize the Bank, Jackson, as incumbent and candidate in the race, vetoed the bill. His veto message justifying his action was a polemical declaration of the social philosophy of the Jacksonian movement pitting “the planters, the farmers, the mechanic and the laborer” against the “monied interest” and arguing against the Bank’s constitutionality. Fearing traditional banking vs e banking pdf reprisals from Biddle and the Bank, Jackson moved swiftly to remove federal deposits from the institution.
In 1833, he succeeded in distributing the funds to several dozen private banks throughout the country. The new Whig Party emerged in opposition to his perceived abuse of executive power, officially censuring Jackson in the Senate. President James Madison and Treasury Secretary Albert Gallatin both supported recharter of the First Bank of the United States in 1811. They cited “expediency” and “necessity” as opposed to principle. The practical arguments in favor of reviving a national system of finance, as well as internal improvements and protective tariffs, were prompted by national security concerns during the War of 1812 and its aftermath.
The roots for the resurrection of the Bank of the United States lay fundamentally in the transformation of America from a simple agrarian economy to one that was becoming interdependent with finance and industry. This is the great desideratum of our system. Andrew Jackson’s victory in the 1828 presidential race was achieved through harnessing the widespread social resentments and political unrest persisting since the Panic of 1819 and the Missouri Crisis of 1820. One such example was in Kentucky, where in 1817 the state legislature chartered forty banks, with notes redeemable to the Bank of Kentucky. Inflation soon rose and the Kentucky Bank came in debt to the National Bank.
Several states, including Kentucky, fed up with debt owed to the Bank and widespread corruption, laid taxes on the National Bank in order to force it out of existence. The 1824 election turned into a four-way contest between Jackson, John Quincy Adams, William H. Jackson won a plurality of the electoral vote and a strong plurality of the popular vote. Jackson ran under the banner of “Jackson and Reform,” promising a return to Jeffersonian principles of limited government and an end to the centralizing policies of Adams. Jackson was both the champion and beneficiary of the revival of the Jeffersonian North-South alliance, capitalizing on the fears building since the Panic of 1819 and the Missouri Compromise, building a base consisting of urban workers, small farmers, and Southern planters.
Although slavery was not a major issue in Jackson’s rise to the presidency, it did sometimes factor into opposition to the Second Bank. When Jackson entered the White House in March 1829, dismantling the Bank was not part of his reform agenda. On principle, he opposed all banks, but hesitated from carrying out such a radical agenda. Amid a more sound economy and under Biddle’s management, the Second Bank of the United States had attained a solid reputation by 1829. It had attained a significant amount of authority, “of a kind unimaginable today.
Popular distrust of the Bank had subsided, although distrust in some western and rural areas remained, although it too had been diminished. By October, Jackson’s closest associates, especially his Secretary of State Martin Van Buren of New York, were developing plans to summarily end the BUS, without proposing any substitutes for the Bank’s fiscal functions. This was a plan anticipated to bring financial success, among other places, to New York. In his annual address to Congress on December 8, 1829, Jackson praised Biddle’s debt retirement plan, but followed this with a “bombshell. A cartoon depicts Jackson battling the many-headed monster of the Bank.
In the aftermath, no clear policy towards the Bank emerged from the White House. Jackson’s official cabinet members were opposed to an overt attack on the Bank. While pro-administration newspapers hardened their stance towards the Bank throughout 1830, official White House policy remained more neutral. On February 2, 1831, while National Republicans were formulating a recharter strategy, Democratic Senator Thomas Hart Benton of Missouri launched an attack against the legitimacy of the Bank on the floor of the Senate, demanding an open debate on the recharter issue. He denounced the Bank, making a case for “a hard money policy against a paper money policy.
Two developments in 1831 diverted Jacksonian Democrats temporarily from pursuing the Bank’s dismantling: the Nullification Crisis and the Peggy Eaton Affair. The president insisted that no bill arise in Congress for recharter in the lead up to his reelection campaign in 1832. Near the end of 1831, a compromise was reached in which Jackson would accommodate recharter as long as modifications were made that produced a “National” institution, and pledging Biddle to refrain from petitioning Congress for renewal until after the general election of 1832. In a key caveat, the Secretary of the Treasury convinced the chief executive to avoid commenting on recharter in the upcoming Annual Address to Congress in December. The enemies of the Bank were shocked and outraged by both speeches.
The Jacksonian anti-Bank backlash instantly provoked a political movement in their opposition, the National Republicans. Henry Clay and Senator Daniel Webster of Massachusetts warned Americans that if Jackson won reelection, he would abolish the Bank. They felt secure that the central bank was sufficiently popular among voters that an attack on the Bank by Jackson would be viewed as an abuse of his executive power. The alliance between the central bank’s president, Nicholas Biddle, and Jackson’s political nemesis, Henry Clay, triggered a counter-offensive by Jackson’s anti-BUS forces. Bank forces mobilized – served ultimately to clarify and intensify the issue for the American people. Biddle arrived in Washington DC to personally conduct the defense of the Bank. He coordinated pro-BUS campaigns, in concert with branch Bank managers, to elicit citizen group petitions drives, sent to Congress to encourage recharter.