The Death of the Second Bank of the United States

excerpted from:
History of The United States by J.C. Ridpath
Copyright 1891 by United States History Co.

With the autumn of 1828, came another Presidential election.
..Jackson was triumphantly elected, receiving a hundred and seventy-eight electoral votes against 83 for his opponent. (incumbent J.Q. Adams)

Jackson's Administration (1829 - 1837)

Andrew Jackson came to the presidential office as a military hero. But he was more than that: a man of great native powers and inflexible honesty.

His personal character was strongly impressed upon his administration. Believing that the public affairs would be best conducted by such means, he removed nearly 700 office-holders, and appointed in their stead his own political friends.

In his first annual message the President took strong grounds against rechartering the Bank of The United States. Believing that institution to be both inexpedient and unconstitutional, he recommended that the old charter should be allowed to expire by its own limitation in 1836. But the influence of the bank, with its many branches, was very great; and in 1832 a bill to recharter was brought before Congress and passed. To this measure the President opposed his veto; and since a two-thirds majority in favor of the bill could not be secured, the proposition to grant a new charter failed, and the bank ceased by the original limitation.

After vetoing the bill to recharter that institution, he concieved that the surplus funds which had accumulated in its vaults would be better distributed among the States. ...Accordingly, in October of 1833, he ordered the accumulated funds of the great bank, amounting to about ten million dollars, to be distributed among certain State banks designated for that purpose.

The financial panic of 1836-7, following soon after the removal of the funds, was attributed by the opponents of the administration to the President's arbitrary action and the prospective destruction of the national bank. To these strictures the adherents of his own party replied that the financial distress of the country was attributable to the bank itself, which was declared to be an institution too powerful and despotic to exist in a free government. The president was but little concerned with the excitement; he had just entered on his second term, with Martin Van Buren for Vice-President instead of Mr. Calhoun.

Van Buren's Administration (1837 - 1841)

In the first year of Van Buren's administration the country was afflicted with a monetary panic of the most serious character. The preceding years had been a time of great prosperity. The national debt was entirely eliminated, and a surplus of nearly forty million dollars had accumulated in the Treasury of the United States. By act of Congress this vast sum had been distributed among the several States. Owing to the abundance of money, speculations of all sorts grew rife. The credit system pervaded every department of business. The banks of the country were suddenly multiplied to nearly seven hundred. Vast issues of irredeemable paper money stimulated the speculative spirit and increased the opportunities for fraud.

The bills of these unsound banks were receivable at the land-offices; and settlers and speculators made a rush to secure the public lands while money was plentiful. Seeing that in receiving such an unsound currency in exchange for the national domain the government was likely to be defrauded out of millions, President Jackson had issued an order called THE SPECIE CIRCULAR, by which the land-agents were directed henceforth to receive nothing but coin in payment for the lands. The effects of this circular came upon the nation in the first year of Van Buren's administration. The interests of the government had been secured by Jackson's vigilance; but the business of the country was prostrated by the shock. The banks suspended specie payment. Mercantile houses failed; and disaster swept through every avenue of trade. During the months of March and April, 1837, the failures in New York and New Orleans amounted to about a hundred and fifty million dollars. A committee of business men from the former city besought the President to rescind the specie circular and to call a special session of Congress.

When Congress convened in the following September, several measures of relief were brought forward. A bill authorizing the issue of treasury notes, not to exceed ten million dollars, was passed as a temporary expedient. More important by far was the measure proposed by the President and brought before Congress under the name of THE INDEPENDENT TREASURY BILL. By the provisions of this remarkable project the public funds were to be kept on deposit in a treasury to be established for that special purpose. It was argued by Mr. Van Buren and his friends that the surplus money of the country would drift into the independent treasury and lodge there; and that by this means the speculative mania would be effectively checked; for extensive speculations could not be carried on without an abundant currency. It was in the nature of the President's plan to separate the business of the United States from the general business of the country.

The bill was defeated, but passed in the following regular session of Congress. In the meantime, the business of the country had in a measure revived. During the year 1838 most of the banks had resumed specie payments. Commercial affairs assumed their wonted aspect; but trade was less vigorous than before. Enterprises of all kinds languished, and the people were greatly disheartened. Discontent prevailed; and the administration was blamed for everything.

Administrations of Harrison and Tyler (1841 - 1845)

In national convention on the 4th of December 1839 General Harrison was nominated by the Whigs to oppose Van Buren's re-election. Harrison with John Tyler of Virginia won the Presidency with an electoral vote of two hundred and thirty four to 60 for Van Buren. Following his inauguration on the 4th of March, 1841, Harrison issued a call for a special session of Congress to consider "sundry important matters connected with the finances of the country." However, just one month after his inauguration, the 68-year old General fell sick and died. On the 6th of April Mr. Tyler took the oath of office, and became President of The United States. Although a Whig in political principles, he was known to be hostile to the United States Bank. This hostility was soon to be manifested in a remarkable manner.

The special session of Congress called by President Harrison continued from May till September. One of the first measures proposed and carried was the repeal of the independent treasury bill. A general bankrupt law was then brought forward and passed, by which a great number of insolvent business men were relieved from the disabilities of debt.

The next measure -- a favorite scheme of the Whigs -- was the rechartering of the bank of the United States. The old charter had expired in 1836; but the bank had continued in operation under the authority of the State of Pennsylvania. Now a bill to recharter was brought forward and passed. The President interposed his veto. Again the bill was presented, in a modified form, and received the assent of both houses, only to be rejected by the executive. The indignant Whigs, baffled by a want of a two-thirds majority in Congress, turned upon him with storms of invective.

Further reading ..

"Act as a rational being and aim at becoming a rallying point for all those who are starved for a voice of integrity - act on your own rational values, whether alone in the midst of your enemies, or with a few of your chosen friends, or as the founder of a modest community on the frontier of mankind's rebirth.

- Ayn Rand, Atlas Shrugged