Bank War

The Bank War refers to the political struggle that ensued in the United States during the presidency of Andrew Jackson (1829-1837) over the existence and future of the Second Bank of the United States. Jackson, fueled by populist sentiment and a distrust of centralized power, opposed the Bank, viewing it as an unconstitutional monopoly that favored wealthy elites and foreign interests at the expense of ordinary citizens and state banks.

The Bank of the United States, chartered in 1816, was a privately-owned, national bank that acted as a central depository for federal funds and regulated the nation's money supply. Its president, Nicholas Biddle, wielded significant financial power.

Jackson's opposition to the Bank manifested in several key events. He vetoed the Bank's recharter bill in 1832, arguing that it was an unconstitutional encroachment on states' rights and that it concentrated too much power in the hands of a few. This veto became a major issue in the 1832 presidential election, which Jackson won decisively.

Following his re-election, Jackson moved to dismantle the Bank. He ordered the removal of federal deposits from the Bank of the United States and their placement in state banks, often referred to as "pet banks" because of their perceived loyalty to the Jackson administration. This act effectively crippled the Bank, leading to its eventual demise when its charter expired in 1836.

The Bank War had significant consequences for the American economy and political landscape. It contributed to the Panic of 1837, a severe economic depression, as the unregulated expansion of credit by the "pet banks" fueled speculative bubbles. It also solidified Jackson's reputation as a champion of the common man and contributed to the development of the Second Party System, with the emergence of the Whig Party in opposition to Jackson and his policies. The Whigs largely supported a national bank, sound money, and internal improvements.