Ironically enough, the Second Bank
of the United States had originally been chartered in 1816 at the behest of
President Madison and Jackson’s fellow Democratic-Republicans in Congress
mainly in response to the financial hardships that the United States had
experienced during the War of 1812. Though the party of Jefferson had
previously established its vehement opposition to the very concept of central
banking during the debate which led to the establishment of the First Bank of
the United States in the 1790s – and had earlier in the 1810s foiled the Federalist
attempt at re-chartering that very same institution – the dire financial
situation that the American republic found itself in at the close of its war
with Great Britain primed the governing Republicans for a reconsideration of a
number of their fundamental principles. This sense of financial desperation
fortuitously coincided with a swelling of national pride engendered by Jackson’s
own victory at the Battle of New Orleans in January of 1815 and the waning
support enjoyed by the Federalists to produce a political environment ideally
suited to radical change. Having previously denied even the constitutionality
of a national bank, Madison and his supporters were now both willing and able
to concede that the United States might in fact have stood to benefit from the
existence of such an instrument of economic stabilization. The resulting
institution would not precisely replicate every aspect of the First Bank of the
United States – the Republicans yet reserved the right to decry “Hamiltonian”
elitism and advocate for more generous access to credit – but it would
nonetheless serve the same essential function. The national debt would be
funded, loans would be secured, and private enterprise would be encouraged.
But while most
of the extant Republican party – including such notables as former Treasury
Secretary Albert Gallatin, Secretary of State James Monroe, and South Carolina
Congressman John C. Calhoun – broadly supported this ideological about-face, a
handful of its members remained stubbornly opposed to any deviation from
established Jeffersonian dogma. Virginia Congressman John Randolph of Roanoke
(1773-1833), whose bellicose temper and uncompromising disdain for all forms of
nationalism made him simultaneously an object of ridicule and admiration, was
by far the most prominent member of this latter group, but Jackson was
assuredly among their number as well. His military career certainly led him to
adopt a number of blatantly nationalist positions, not the least of which was
the idea of using protective tariffs to promote domestic manufacturing. But
central banking never seemed to achieve this level of acceptance with Old
Hickory, notwithstanding the support it enjoyed among his fellow Republicans in
Congress and the White House. Granted, he did not make his dislike of the
Second Bank a major feature of his campaign for President in 1828 or declare at
any point that he intended to see it dismantled. But his antipathy remained
latent, like that of a significant number of Americans whose livelihoods had
been injured by the Bank’s fumbling responses to the Panic of 1819, and it was
arguably only a matter time until something fanned the embers of Jackson’s
resentment into a fierce and spiteful flame.
To the credit of
the Second Bank and its directors, its reputation had recovered significantly
by the late 1820s from the missteps which had followed the Panic of 1819. By
the time that Jackson was inaugurated as President in March of 1829, public
confidence in the Bank was in fact relatively high. A sustainable balance had
been struck under the leadership of Nicolas Biddle (1786-1844) between
maintaining suitable reserves of hard currency, printing suitable quantities of
paper money, establishing branch offices in the states, and making credit
widely available. Even Jackson’s winning coalition seemed more or less to have
made peace with its existence. Certain members of the newly established
Democratic Party, it was true, remained critical of what they perceived to be
the Bank’s excessive printing of paper bills and the inability of small-scale
farmers to gain easy access to loans. But they could see as well as anyone that
the Bank was too popular to attack in the immediate, and certainly not on the
grounds that it had failed to serve the needs of the public. Fortunately for
these skeptics – with Jackson chief among them – an opportunity presented
itself soon enough to attack the Bank from a different avenue entirely. Over
the course of the year 1829, rumors – as they have a habit of doing – began to
circulate among certain interested parties that the Second Bank had attempted
to interfere in the Election of 1828 to the supposed benefit of Jackson’s
opponent. Branch offices in several states were said to have loaned more
readily to those who pledged to support incumbent President John Quincy Adams,
a disproportionate number of Adams supporters were said to have been appointed
to the Bank’s board of directors, and Bank capital was said to have been
contributed directly to the Adams campaign. There was little evidence to
support any of these allegations, and a number of people close to the President
actively denied that they could be true, but such things were only of passing
importance. The spark of Jackson’s distrust had been successfully re-kindled.
The Second Bank of the United States was unofficially on watch.
The saga that
followed, between 1829 and 1834, began like something akin to a very clumsy
game of chess. Biddle, conscious of the need to secure the cooperation of
Jackson and his supporters if the Second Bank was going survive a vote on its
re-charter in 1836, made the first move. Seeking to mollify the President, he
accordingly put forward a proposal in November of 1829 whereby the resources at
the Bank’s disposal could be directed towards the full retirement of the extant
national debt. Jackson reacted positively to the overture. The national debt,
as it happened, was the other core aspect of the Hamiltonian financial
apparatus which he particularly disliked. But while Biddle’s plan was
appreciated, he replied, and would surely be recommended to Congress at the
first possible opportunity, the constitutionality of the Bank yet remained an
open question. This was followed in December by a request in Jackson’s first
State of the Union Address that Congress make a point of reconsidering the
Bank’s legitimacy. Said institution having, “Failed in the great end of
establishing a uniform and sound currency,” Jackson declared, it was
accordingly unclear whether it was strictly necessary to maintain a national
bank or if the Treasury Department might handle matters on its own. This was,
in point of fact, a highly specious claim, the Bank having done much to
stabilize the value of its notes by the latter half of the 1820s. As with the
rumors of the Bank’s supposed political activities, however, the veracity of
the accusation mattered little in the short-term. Jackson wasn’t reacting in
the present to clearly demonstrable facts so much as he was laying the
groundwork for the actions he fully intended to take in the future.
Biddle was
understandably alarmed and dismayed when he heard tell of the President’s
patently slanderous evaluation of the institution he was running. The
re-charter vote, it was true, was over six years away, and it was possible that
Jackson might not even be President when it finally arrived. But just as
Jackson seemed to have been spurred to aggressive action by the evident
popularity of his foe, so Biddle appeared to take Old Hickory’s re-election as
a given and sought to confront, head-on, the probable consequences thereof. The
first step, and probably the most involved, was to initiate a kind of public
relations campaign whereby, over the course of several years and by way of
personal appearances all over the United States, Biddle might manage to
convince both the American people and their representatives in Congress that
the Bank was as essential to the nation’s economic stability. A great deal of print
media accompanied this effort, in the form of articles, essays, pamphlets,
testimonials, stockholders’ reports, and petitions, with the Bank’s supporters
in Congress making their own contribution by conducting investigations and
submitting official accounts of the Bank’s soundness. This effort, once it got
underway in the opening months of 1830, had the dual effect of both raising
public awareness of the potential threat facing the Bank and restoring
stockholder confidence following a serious decline brought on by Jackson’s
aforementioned address. Since the President had yet to offer a more cohesive
critique since then, or anything on the order of a potential plan of action –
the events of the Nullification Crisis having quite successfully diverted his attention
– matters thus appeared to have settled more or less in the Bank’s favor.
The brief period of détente that followed
was effectively shattered by a series of events that took place between
December of 1830 and February of 1831. On December 7th, as had been
the case the year prior, Jackson once more called into question the
constitutionality of the Bank in his State of the Union Address. “Nothing has
occurred,” he declared, “To lessen in any degree the dangers which many of our
citizens apprehend from that institution as at present organized.” In
consequence, Jackson continued, it seemed only prudent that, “I should again
call the attention of Congress to the subject.” The following February,
Missouri Senator Thomas Hart Benton (1782-1858) responded to this call to
action by delivering a speech critical of the Bank’s legitimacy and calling for
an open debate on its pending re-charter. Supporters of the Bank, led by
National Republican Senator Daniel Webster (1782-1852), managed to stymie
Benton’s initiative by calling a vote to end the discussion, but their margin
of victory (32-20) was uncomfortably slim. Jackson thereafter offered public
praise for Benton’s speech and announced shortly thereafter that he intended to
run for re-election in 1832. In all, it had become quite clear quite quickly
the Bank was well and truly in danger for its life. The period of temporizing
that followed – wherein Jackson appeared to reach a compromise with his
pro-Bank Treasury Secretary only to pull back at the last second at the behest
of his anti-Bank Attorney General – was little more than a smokescreen. The President’s
anti-Bank convictions had become well and widely known.
The response of the opposition National
Republicans was more or less to cease dallying and proceed full force in favor
of the Bank and its re-charter. First, at their national convention in
Baltimore in December of 1831, the assembled delegates selected long-serving
Senator and ardent nationalist Henry Clay as the party’s nominee for President.
Clay had been a supporter of the Bank since its original charter was approved
by Congress in 1816, and his belief in the efficacy of protective tariffs,
central banking, and infrastructure spending was at the core of his public
profile. Then, doubtless seeking to draw out the true extent to which the
American people approved of the Bank or not, the National Republicans called
for that same institution to be re-chartered well in advance of the established
date in 1836. In the estimation of party leaders like Clay and Webster, the
fate of the Bank was the ideal issue by which they embarrass Jackson and take
control of the White House. Though anti-Bank Democrats were certainly prominent
in the President’s cabinet and counted prominent members of Congress among
their number, the National Republicans were nonetheless convinced that a sufficient
percentage of Old Hickory’s own party were quietly in favor of the
institution’s continued existence. Not only that, they further avowed, but the
majority of the American people had already been convinced that the relative
health and stability of the contemporary American economy was due to the Bank’s
influence on credit markets and the currency supply. By making the Bank an
election issue, they accordingly hoped to split the Democrats, undermine the
otherwise unassailable popularity of Andrew Jackson, and score a resounding
victory for their chosen nominee.
Nicolas Biddle, it turned out, was not so
sure about any of this. On one hand, he had become increasingly convinced that
Jackson was in no way inclined to compromise on the issue of the Bank. Old Hickory
appeared to oppose its very existence on principle and seemed unlikely to
settle for anything less than its complete dissolution. On the other hand,
Biddle had also received numerous assurances from people with close connections
to the Jackson Administration that the President was not prepared to veto a
bill mandating the re-charter of the Bank if such legislation was duly approved
by Congress. The key, these sources agreed, was to wait until after the
election of 1832. “If you apply now," Treasury Secretary Louis McLane
(1786-1857) thus wrote to Biddle, "you assuredly will fail,—if you wait,
you will as certainly succeed.” Upon reflection, the Bank’s director decided,
if possible, to postpone the re-charter effort until some point closer to the
extant charter’s statutory expiration. Jackson remained an exceptionally
popular figure, and it no doubt seemed wiser to avoid antagonizing him
unnecessarily by potentially threatening his re-election. Unfortunately for
Biddle, however, there were more things that warranted consideration than just
his own inclinations. The National Republicans seemed willing to put the whole
of their weight behind the re-charter effort only if it was launched in advance
of the coming election, several of his fellow directors were anxious to take
advantage of favorable support in the House, and the Bank’s shareholders
expressed concern at the prospect of attempting to secure a re-charter bill closer
to the date when the original 1816 authorization was set to expire. Hemmed in,
as it were, on multiple sides, Biddle thus had little choice but to agree to
pursue re-charter in the early months of 1832. The requisite bills were
introduced in the House and the Senate in January of that year with respectable
support among key groups of Democrats and every prospect of a safe passage.
Jackson and his allies did not react well
to the introduction of the Bank issue into the context of the 1832 presidential
election. While quite possibly inclined to let the matter lie fallow for a time
until all concerned parties were able to have their particular grievances aired
and addressed, the emergence of a partnership between the National Republicans
under Henry Clay and the leadership of the Bank under Nicolas Biddle could only
have been intended to thwart Jackson’s political prospects by driving a wedge
between himself and his fellow partisans in the Democratic Party. The result,
as it played out over the course of the year that followed, was exactly what
Daniel Webster had eagerly tried to avoid in the early months of 1831: a public
debate on the usefulness, necessity, and constitutionality of the Second Bank
of the United States. Jackson gathered his allies – the aforementioned Thomas
Hart Benton, Tennessee Congressman James K. Polk (1795-1849), newspaper editor
Francis Preston Blair (1791-1876), and Attorney General Roger Taney (1777-1864)
– Biddle marshaled his resources, and the battle, before long, was well and
truly joined. Jackson, for his part, came to understand fairly quickly that his
side was likely to fail. Support in Congress for the re-charter of the Bank was
simply too strong to hope for a favorable legislative outcome. Having thus
determined to veto the bill once it came to him for his signature, the
President and his allies instead directed their efforts towards drawing out the
conflict and polarizing the electorate. If being pro-Jackson could successfully
be fused with the idea of being anti-Bank, Old Hickory felt that his freedom of
action might be substantially widened at the same time that his re-election was
substantially guaranteed. The key, he and his cohorts understood, was to make
Biddle and the Bank look as corrupt and untrustworthy as humanly possible.
Luckily for Jackson, Biddle was only too
eager to oblige. During the six-month period leading up to the re-charter vote
in the summer of 1832, he worked ceaselessly to both demonstrate the public’s
support for the Bank’s continued existence to Congress and show Congress’s
support for the Bank to the public at large. The former effort was harmless
enough, taking the form, as it did, of public petitions gathered by branch
managers and submitted to Congress for entry into the record of debate. The
latter, however, strayed dangerously close to exactly the kind of political
interference that Jackson and his allies had been actively decrying. Keen, as
ever, to make use of every resource at his disposal, Biddle solicited pro-Bank
articles from numerous members of the House of Representatives and had them
printed and distributed as widely as he could afford. Whether or not this
really convinced anyone whose opinion wasn’t already set of the legitimacy of
the Bank and its positive effect on the American economy, it most certainly
provided the Democratic press with ample fodder for claiming that Biddle and
his pet institution were too willing and too able to bend the legislative
process to their own selfish ends. Little harm was ultimately done to the
prospects of the re-charter bill – it was approved by the Senate in June by a
margin of 28 to 20 and by the House in July by a margin of 107-85 – but much
harm was done to the public image of the Bank.
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