Bank War

Bank War

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.