In 1832, Jackson had vetoed a bill calling for an early renewal of the Second Bank’s charter, but renewal was still possible when the charter expired in 1836; to prevent that from happening, he set out to reduce the bank’s economic power. Acting against the advice of congressional committees and over the opposition of several cabinet members, and after replacing two resistant secretaries of the treasury with a more amenable appointee (Roger Taney), Jackson announced that, effective October 1, 1833, federal funds would no longer be deposited in the Bank of the United States. Instead, he began placing them in various state banks; by the end of 1833, twenty-three ‘pet banks’ (as they were popularly known) had been selected.
The president of the Bank, Nicholas Biddle, anticipating Jackson’s actions, began a countermove in August 1833; he started presenting state bank notes for redemption, calling in loans, and generally contracting credit. A financial crisis, he thought, would dramatize the need for a central bank, ensuring support for charter renewal in 1836. In fact, Biddle’s campaign appears to have had less effect than either his supporters or his detractors believed at the time, but the Bank War became a matter of intense debate in Congress, in the press, and among the public. Deputations of businessmen descended on Washington, complaining about business conditions and seeking an end to the Bank War, while administration spokesmen argued that Biddle’s capacity to disrupt the economy only highlighted the dangers of a central bank. The federal deposits were not returned to the Second Bank, and its charter expired in 1836. President Jackson had won the Bank War.
The Reader’s Companion to American History. Eric Foner and John A. Garraty, Editors. Copyright © 1991 by Houghton Mifflin Harcourt Publishing Company. All rights reserved.