http://www.digitalhistory.uh.edu/database/article_display.cfm?HHID=640
Jacksonian Democracy
The Celebrated Bank War
Period: 1820-1860
The major political issue of Jackson?s presidency was his war against the Second Bank of the United States.
The banking system at the time Jackson
assumed the presidency was completely different than it is today. At
that time, the federal government coined only a limited supply of hard
money and printed no paper money at all. The principal source of
circulating currency?paper bank notes?was private commercial banks (of
which there were 329 in 1829), chartered by the various states. These
private, state-chartered banks supplied the credit necessary to finance
land purchases, business operations, and economic growth. The notes
they issued were promises to pay in gold or silver, but they were
backed by a limited amount of precious metal and they fluctuated
greatly in value.
In 1816, the federal government had
chartered the Second Bank of the United States partly in an effort to
control the notes issued by state banks. By demanding payment in gold
or silver, the national bank could discipline over-speculative private
banks. But the very idea of a national bank was unpopular for various
reasons. Many people blamed it for causing the Panic of 1819. Others
resented its political influence. For example, Senator Daniel Webster
was both the bank?s chief lobbyist and a director of the bank?s Boston
branch. Wage earners and small-business owners blamed it for economic
fluctuations and loan restrictions. Private banks resented its
privileged position in the banking industry.
In 1832, Henry Clay, Daniel Webster, and
other Jackson opponents in Congress, seeking an issue for that year's
presidential election, passed a bill rechartering the Second Bank of
the United States. The bank?s charter was not due to expire until 1836,
but Clay and Webster wanted to force Jackson to take a clear pro-bank
or anti-bank position. Jackson had frequently attacked the bank as an
agency through which speculators, monopolists, and other seekers after
economic privilege cheated honest farmers and mechanics. Now, his
adversaries wanted to force him either to sign the bill for recharter,
alienating voters hostile to the bank, or veto it, antagonizing
conservative voters who favored a sound banking system.