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.