Jackson, the Bank War, and the Legacy of the Second Bank of the United States

Abstract

President Jackson vetoed the bill to re-charter the Second Bank of the United States on 10 July 1832. I describe events leading to the veto and through the Bank’s dissolution in 1836 using private correspondence and official government documents. These sources reveal a political process through which charges against the Bank took hold, accomplices and back-up plans were lined up, and the Bank was ultimately destroyed with the assistance of chartered banks in New York City. Although the aggressive means by which the Bank was dismantled led to a system-wide financial failure and recession in the short term, the long-run outcome was likely a wider diffusion of banking services and a more efficient allocation of capital. The Federal Reserve benefited from applying a more rigorous regulatory structure onto the grid that the populists, free bankers, and National Banking System established.