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

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  • Peter L. Rousseau

    (Vanderbilt University)

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.

Suggested Citation

  • Peter L. Rousseau, 2021. "Jackson, the Bank War, and the Legacy of the Second Bank of the United States," Vanderbilt University Department of Economics Working Papers 21-00001, Vanderbilt University Department of Economics.
    • Handle: RePEc:van:wpaper:vuecon-sub-21-00001
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    References listed on IDEAS

    as
    1. Rousseau, Peter L., 2002. "Jacksonian Monetary Policy, Specie Flows, And The Panic Of 1837," The Journal of Economic History, Cambridge University Press, vol. 62(2), pages 457-488, June.
    2. Bray Hammond, 1936. "Free Banks and Corporations: The New York Free Banking Act of 1838," Journal of Political Economy, University of Chicago Press, vol. 44, pages 184-184.
    3. Weber, Warren E., 2006. "Early State Banks in the United States: How Many Were There and When Did They Exist?," The Journal of Economic History, Cambridge University Press, vol. 66(2), pages 433-455, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bank of the United States; Jacksonian monetary policy; central banking; Federal Reserve.;
    All these keywords.

    JEL classification:

    • N2 - Economic History - - Financial Markets and Institutions
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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