President Andrew Jackson didn’t hate all banks, just one of them. The problem was that the one bank he hated was the Second Bank of the United States, which was essentially the country’s Central Bank. Of course, “Second” Bank implies there was a “First” Bank. If you figured as much, you’re spot-on right.
The First Bank of the United States had been created in February of 1791 (we briefly mentioned it) by President Washington and Treasury Secretary Hamilton. Its 20-year charter had expired in 1811, but had been renewed in 1816 (as the Second Bank) with another 20-year charter.
And President Jackson wanted nothing to do with it. He believed it was a tool of wealthy businessmen to oppress common people. He also thought that, due to his recent election to a second term, the people had given him a mandate to shut down the Bank. But even more than that, he believed the Second Bank was a threat to the existence of the Republic…one could almost say to the point of obsession.
In his biography of the President, Jon Meachem recounts a conversation Jackson had with a minister as they sailed aboard a steamship to Staten Island in June of 1833. Jackson said, “What a country God has given us! How thankful we ought to be that God has given us such a country to live in. … We have the best country, and the best institutions in the world. No people have so much to be grateful for as we. But ah! My reverend friend, there is one thing that I fear will yet sap the foundation of our liberty – that monster institution, the Bank of the United States! Its existence is incompatible with liberty. One of the two must fall – the bank or our free institutions.”
The President’s plan was take the country’s deposits out of the “big-B” Bank and deposit them in various “little-B” banks. There was just one little issue…Treasury Secretary William Duane. Having just been appointed to the position on June 1st, he was the guy who, by law, was empowered to decide what to do with the public funds. And from day 1, the screws were put to him to fall in line with Jackson’s wishes. Of course, those in favor of the Bank knew the rules as well, and they pushed Duane just as hard from the other side.
William Duane then spent time in the Constitution, and came away believing that the real authority over the Bank lay with Congress, and not the President. Meachem, almost humorously I think, writes, “He was still thinking in pre-Jacksonian terms about the role of the President.” The President responded predictably to Duane, “My object, sir, is to save the country, and it will be lost if we permit it to exist.”
And on September 10, 1833, President Jackson took action on his own. He received word that there were numerous good banks ready to take on the funds removed from the Bank. And so he announced to his Cabinet that the government would no longer use the Second Bank of the United States.
President Jackson had just thrown down the gauntlet in the Bank War.
Recommended Reading: American Lion