Corporations in the Early United States, Part IX: the War on the Bank

            I think, and I would not be alone in doing so, that Andrew Jackson had more or less decided how he felt about the re-charter of the Second Bank of the United States by the time he delivered his 2^nd State of the Union Address in December, 1830. Private correspondence aside, which contains its share of anti-Bank sentiment, the text of said address alone demonstrates fairly clearly the antipathy Jackson felt towards the idea of a national bank (or any other kind of national corporation). In the same breath, albeit rather subtly, it also establishes Old Hickory’s nonchalant, almost unconscious support for broadening the scope of state power and his regard for corporations as a means to do so. Jackson’s 2^nd State of the Union is not a dramatic declarative, not a hallowed text that has since gone down in the annals of American political philosophy. It was, however, a harbinger of things to come, and an important point from which to begin to understand what has become known as the Bank War.

            I say “begin,” because the sections of Jackson’s 1830 Address to Congress that dealt with the Bank were in many ways a warning shot aimed at 2^nd BUS president Nicholas Biddle and his supporters in the opposition National Republican Party (soon to be known as the Whig Party). Though his administration had theretofore maintained a relatively cordial relationship with the Second Bank and its officers, Jackson was driven to conclude by private conviction and political necessity that the institution was too dangerous to perpetuate (at least in its present form). Having suffered through the effects of rapid expansions and contractions of credit as a trader, farmer and land speculator, Jackson was ill-inclined to receive the assurances of the Second Bank’s supporters that Biddle had set the institution, and the nation, on a stable financial footing. The core of his supporters, small businessmen, farmers and slaveholders as Jackson had been, were similarly antagonistic to the regulatory oversight the 2^nd BUS exercised over its state counterparts. That these same poor-to-middling White male voters had been awakened to the undemocratic nature of the Second Bank by the populist rhetoric ginned up by staunch Jackson supporter and Democratic Party boss Martin Van Buren made it virtually impossible for the Hero of New Orleans to gloss over the re-charter issue for all that long.

            Though he certainly tried.

            In the aftermath of Jackson’s opening volley at the end of 1830 the Whigs began to formulate potential strategies to secure a re-charter of the 2^nd BUS, no doubt years in advance of when they believed the 1836 deadline necessitated. Meanwhile, Jacksonian Senator Thomas Hart Benton went on the warpath decrying the unconstitutionality of the Second Bank and demanding an open debate on the issue of its forthcoming re-charter. While these were likely outcomes that Jackson had intended, the year that followed kept the President otherwise too preoccupied to seize on the momentum that was steadily building. A seemingly minor scandal involving the wife of one of his cabinet secretaries quickly escalated out of all proportion over the course of 1830-1831, forcing Jackson into an embarrassing political stalemate from which there appeared no easy escape. Combined with a rather more serious crisis revolving around a purposefully harsh tariff and the rather extreme reaction of the government of South Carolina, the end of 1831 and beginning of 1832 saw Jackson robbed of both his entire cabinet and his Vice-President. As a result he was forced to adopt a somewhat more conciliatory position vis-à-vis the Second Bank and its ongoing survival. Two of Jackson’s new cabinet members, Secretary of State Edward Livingston and Treasury Secretary Louis McLane, were on-record supporters of the 2^nd BUS and attempted to foster a compromise between the President and the Second Bank’s Nicholas Biddle. McLane accordingly produced a proposal for reforming the 2^nd BUS that would have balanced many of Jackson’s objections with the priorities of the Bank and its shareholders.

            Despite the vitriol he would later direct at the 2^nd BUS and its leader Jackson appeared receptive to the idea of a compromise, with a significant caveat. Though as aforementioned the core of Jackson’s support came from working-to-middle class White males who traditionally distrusted centralised authority and had suffered dearly during the Panic of 1819, they could not be depended on to deliver a Jackson victory in the presidential election of 1832 on their own. Pennsylvania and New York were the two most populous states in the 1830s and consequently carried the largest numbers of electoral votes (30 and 42, respectively). They were also home to some of the strongest supporters of the 2^nd BUS (particularly Pennsylvania, where it was headquartered) and had been won by Jackson in the election of 1828 by relatively slim margins (Pennsylvania with a still comfortable 66%, New York with a perilous 51%). Jackson and his allies rightly feared that making the re-charter of the Second Bank a campaign issue in 1832 might bleed away enough support in these two states to potentially cost the Democrats the election. Consequently, Jackson’s penultimate State of the Union Address of his first term, delivered in December, 1831, was intended to more or less omit any discussion of the 2^nd BUS, its constitutionality, or its impending re-charter. It was hoped that this would signal supporters and critics alike that the Bank issue was off the table for the duration of the 1832 campaign season. It had been likewise loosely agreed by Biddle and his allies in the Whig Party, thanks to McLane’s mediation, that a bill authorizing re-charter of the 2^nd BUS would not be introduced in Congress during that same period. So long as each party involved held to their end of the bargain it appeared that a formal confrontation would be averted and the 2^nd BUS would survive.

            Unfortunately for Louis McLane, who had gone to significant lengths to devise and secure a settlement between the anti-bank and pro-bank forces, certain other elements within Jackson’s cabinet were less inclined toward rapprochement. The original draft of Jackson’s 3^rd State of the Union contained a section penned by the Treasury Secretary that made it clear the president was leaving the decision concerning re-charter in the hands of Congress. Attorney General (and future Chief Justice of the Supreme Court) Roger Taney (pronounced “tawny”) balked at the implicit deference to Congressional authority, and suspecting Jackson felt likewise convinced him to rewrite the address so that the administration’s position became somewhat more equivocal. In fairness to Jackson’s sense of restraint the newly-revised Address mentioned the word “bank” only once, yet in tone seemed intent on delaying a conflict rather than attempting to avoid one. The day after it was delivered to Congress Secretary McLane, who was unaware of the alteration to the text he had devised, submitted a report to the same body that praised the Second Bank’s regulatory successes and endorsed the re-charter of a sufficiently modified institution. Jackson’s anti-bank supporters were incensed by both the president’s apparent desire to avoid taking on the 2^nd BUS directly as well as McLane’s enthusiastic support for the selfsame institution. They responded with a flurry of editorials and essays in the Jacksonian press denouncing the Bank.

            Stay with me.

            The Whig Party leadership, having witnessed the violent reaction of the anti-bank Jacksonians to even a proposal for re-chartering the 2^nd BUS, seized on the issue as the best means for unseating Jackson in the forthcoming election of 1832. Whig Senators Henry Clay and Daniel Webster concluded that because the core of Jackson’s support came from people who were strongly against the continued existence of the Bank, the president would not have dared alienate them during an election year by coming out in favor of re-charter. Faced with a bill to that effect, to which the Whigs could assure a smooth passage through Congress, Jackson would be forced to veto. This would in turn cost the Democrats significant support among the multitude of voters who had come to regard the Second Bank under Nicholas Biddle as a force for economic growth and stability, and potentially lose the election for Jackson. Biddle himself, whose cooperation was required by the Whigs, was reluctant to further incite anti-bank Jacksonians and feared, along with Secretary McLane, that some manner of compromise with the administration over the Bank was no longer possible. Thanks to significant cajoling, however, and assurances on the part of those close to Jackson that he would not risk an outright veto of re-charter, Biddle eventually agreed to support the Whig proposal. Consequently bills were introduced in both the House and Senate in January, 1832 that authorized the re-charter of the Second Bank of the United States.

            The Democratic response to this open attempt by the Whigs to force a confrontation over the 2^nd BUS was a rapid and widespread mobilization of some of the party’s most talented and effective orators, legislators and editorialists. This effort enlisted, among others, Thomas Hart Benton in the Senate, future Speaker and President James K. Polk in the House, Attorney General Taney and Postmaster General Amos Kendall, and journalist and eventual co-founder of the Republican Party Francis Preston Blair. Their aim was to initiate a campaign intended to discredit the Second Bank and its directors in the eyes of the American public and their representatives. Among the tactics this group employed was a proposed Congressional investigation into the activities of the 2^nd BUS and its directors stemming from allegations of misconduct and widespread corruption. Baseless though many of the claims made against it were by the anti-bank Jacksonians, the Second Bank had shown a high degree of partiality by offering credit to those who had proven themselves its consistent supporters. Indeed, many of the legislators, editors, and merchants who formed the core of the pro-bank faction had benefited directly from the benevolence of the 2^nd BUS and its directors. This made rallying an effective defense much more difficult. Attempting to obstruct an investigation might have aroused public suspicion, more so if it came to light exactly who were among the Second Bank’s most frequent patrons. A special committee was therefore selected without pro-bank obstruction and a report was produced, laden with hearsay and innuendo, which served to confirm Jackson’s various criticisms. When Biddle himself arrived in Washington during the climax of the re-charter debate and began distributing citizen’s petitions and urging Congressman to write pro-bank editorials, Francis Blair seized on the fact as confirmation of the Second Bank’s intrusion into the political process and its fostering of corruption.

            Though the anti-bank Jacksonians were able to delay the re-charter debate far beyond what many of their opponents thought possible, and sowed significant doubt in the minds of the American public as to the legitimacy of a national bank, their efforts were ultimately ineffective. The re-charter bills were successfully passed in the Senate on June 11^th by a margin of 28-20 and in the House on July 3^rd, 107-85. Wasting no time, Jackson vetoed the combined re-charter bill on July 10^th.