Second Bank of the United States front. A private corporation with public duties, the bank handled all fiscal transactions for the U. Government, and was accountable to Congress and the U. Twenty percent of its capital was owned by the federal government, the bank’s single largest stockholder. The essential function of the bank was to regulate the public credit issued by private banking institutions through the fiscal duties it performed for the U.
Treasury, and to establish a sound and stable national currency. The political support for the revival of a national banking system was rooted in the early 19th century transformation of the country from simple Jeffersonian agrarianism towards one interdependent with industrialization and finance. An 1824 draft on the Bank written and signed by Daniel Webster, its attorney and the director of the Boston branch. Opposition to the bank’s revival emanated from two interests. Under the management of the first BUS president William Jones, the bank failed to control paper money issued from its branch banks in the West and South, contributing to the post-war speculative land boom. Resigning in January 1819, Jones was replaced by Langdon Cheves who continued the contraction in credit in an effort to stop inflation and stabilize the bank, even as the economy began to correct.
The central bank’s reaction to the crisis—a clumsy expansion, then a sharp contraction of credit—indicated its weakness, not its strength. Under Biddle’s guidance, the BUS evolved into a powerful banking institution that produced a strong and sound system of national credit and currency. From 1823 to 1833, Biddle expanded credit steadily, but with restraint, in a manner that served the needs of the expanding American economy. By the time of Jackson’s inauguration in 1829, the national bank appeared to be on solid footing.
A Democratic cartoon from 1833 showing Jackson destroying the bank with his “Order for the Removal,” to the approval of the Uncle Sam like figure to the right, and the annoyance of the bank’s president, shown as the Devil himself. Numerous politicians and editors who were given favorable loans from the bank run for cover as the financial temple crashes down. Jackson mobilized his political base by vetoing the recharter bill and, the veto sustained, easily won reelection on his anti-bank platform. In hopes of extorting a rescue of the bank, Biddle induced a short-lived financial crisis that was initially blamed on Jackson’s executive action.
In February 1836, the bank became a private corporation under the Commonwealth of Pennsylvania law. A shortage of hard currency ensued, causing the Panic of 1837 and lasting approximately seven years. The bank maintained the following branches. Listed is the year each branch opened. Whereas other central banks of that era were wholly private, the BUS was more characteristic of a government bank. 5 million of which represented the government-owned share.
5 million, payable in three installments, to the government for the privilege of using the public funds, interest free, in its private banking ventures. As exclusive fiscal agent for the federal government, it provided a number of services as part of its charter including: holding and transfer of all U. The chief personnel for the bank comprised twenty-five directors, five of whom were appointed by the President of the United States, subject to Senate approval. Federally appointed directors were barred from acting as officials in other banks. Two of the three BUS presidents, William Jones and Nicholas Biddle, were chosen from among these government directors. Headquartered in Philadelphia, Pennsylvania, the bank was authorized to establish branch offices where it deemed suitable and these were immune from state taxation. In this capacity, the bank would preside over this democratization of credit, contributing to a vast and profitable disbursement of bank loans to farmers, small manufacturers and entrepreneurs, encouraging rapid and healthy economic expansion.