Controversy in the 1830s over the existence of the Bank of the United States, at that time the only national banking institution.The first Bank of the United States, chartered in 1791 over the objections of Thomas Jefferson, ceased in 1811 when Jeffersonian (Democratic) Republicans refused to pass a new federal charter. In 1816 the second Bank of the United States was created, with a 20-year federal charter. In 1829 and again in 1830 Pres. Andrew Jackson made clear his constitutional objections to and personal antagonism toward the bank. He believed it concentrated too much economic power in the hands of a small moneyed elite beyond the public's control. Its president, Nicholas Biddle, with the support of Henry Clay and Daniel Webster, applied for a new charter in 1832, four years before the old charter was due to expire, thus ensuring that the bank would be an issue in the 1832 presidential election. Jackson vetoed the recharter bill and won the ensuing election, interpreting his victory as a mandate to destroy the bank. He forbade the deposit in the bank of government funds; Biddle retaliated by calling in loans, which precipitated a credit crisis. Denied renewal of its federal charter, the bank secured a Pennsylvania charter in 1836. Faulty investment decisions forced it to close in 1841.
* * *▪ United States historyin U.S. history, the struggle between President Andrew Jackson (Jackson, Andrew) and Nicholas Biddle (Biddle, Nicholas), president of the Bank of the United States, over the continued existence of the only national banking institution in the nation during the second quarter of the 19th century. The first Bank of the United States, chartered in 1791 over the objections of Thomas Jefferson, ceased in 1811 when Jeffersonian Republicans refused to pass a new federal charter. In 1816 the second Bank of the United States was created, with a 20-year federal charter.In 1829 and again in 1830 Jackson made clear his constitutional objections and personal antagonism toward the bank. He believed it concentrated too much economic power in the hands of a small monied elite beyond the public's control. For support, Biddle turned to the National Republicans—especially Henry Clay (Clay, Henry) and Daniel Webster (Webster, Daniel)—turning the issue into a political battle. On their advice, Biddle applied for a new charter even though the old charter did not expire until 1836.The recharter bill easily passed both houses of Congress in 1832. Saying “The bank is trying to kill me, but I will kill it,” Jackson issued a potent veto message. The fate of the bank then became the central issue of the presidential election of 1832 between Jackson and Clay. Jackson concluded from his victory in that election that he had a mandate not only to refuse the bank a new charter but to destroy as soon as possible what he called a “hydra of corruption.” (Many of his political enemies had loans from the bank or were on its payroll.)Jackson ordered that no more government funds be deposited in the bank. Existing deposits were consumed paying off expenses, while new revenues were placed in 89 state “pet banks.” Biddle responded by calling in loans and thus precipitating a credit shortage and business downturn. Clay in 1834 pushed a resolution through the Senate censuring Jackson for removing the deposits.Jackson held firm. Biddle was eventually forced to relax the bank's credit policies, and in 1837 the Senate expunged the censure resolution from its record. When the bank's federal charter finally expired, Biddle secured a state charter from Pennsylvania to keep the bank operating. But in 1841 it went out of business, the result of faulty investment decisions and national economic distress.
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