The Bank War was the political struggle that ensued over the fate of the Second Bank of the United States during the presidency of Andrew Jackson. In 1832, Jackson vetoed a bill to recharter the Bank, and began a campaign that would eventually lead to its destruction. For decades afterward, the U.S. treasury system would go through several iterations until the Federal Reserve was created in 1914.


Banking, currency and monetary policy was a source of great controversy in the early United States. In 1791, Congress established the original Bank of the United States, masterminded by Treasury Secretary Alexander Hamilton.

Conflict over the Bank caused a split within George Washington’s administration that would later widen into the formation of the nation’s first two political parties: Hamilton’s Federalists and the Democratic-Republicans, led by Thomas Jefferson.

With Jeffersonians in control, the charter for the original Bank expired in 1811. But the nation’s financial struggles during the War of 1812 led Congress to charter the Second Bank of the United States for 20 years starting in 1816 and fund it with $35 million, a gigantic sum at the time.

After struggling in its early years, the Bank built a solid reputation by the end of the 1820s under the leadership of its third president, Nicholas Biddle.


Jackson and Distrust of the National Bank

Among those who distrusted the Second Bank of the United States was Andrew Jackson, the Tennessee war hero who was elected president in 1828. As the champion of the common man, Jackson opposed the concentration of power in the hands of the powerful few—like Biddle, who was from a prominent Philadelphia family—at the expense of ordinary farmers and workers.

As president, Jackson made no secret of the fact that he opposed the Bank’s upcoming recharter in 1836. The Bank was popular with many Americans, however, and Jackson’s opponents—including Senator Henry Clay of Kentucky—convinced Biddle to seek an early recharter before the election of 1832, betting that Jackson would not veto the recharter if Congress passed it.

Both houses of Congress did pass the bill, which extended the charter of the Bank for an additional 15 years. One week later, on July 10, 1832, Jackson returned the bill unsigned, along with a message to Congress in which he announced his veto, declaring that the Bank was “unauthorized by the Constitution, subversive to the rights of States, and dangerous to the liberties of the people.”

Impact of Jackson's Veto

In his veto message, Jackson directly contradicted the 1819 Supreme Court ruling in McCulloch v. Maryland, which held that the Bank of the United States was constitutional. He claimed the right for himself as president to judge its constitutionality, independent of Congress or the courts.

The Bank’s charter gave the institution too much power over the nation’s financial markets, he argued—power that enabled it to generate huge profits for its stockholders, most of whom were “foreigners” and “our own opulent citizens.”

“If we must have a bank with private stockholders, every consideration of sound policy and every impulse of American feeling admonishes that it should be purely American,” Jackson wrote.

But the real evil of the Bank, Jackson claimed, was its creation of a privileged class of Americans with too much money and political power. “It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes,” he wrote.

This was unjust and dangerous to “the humble members of society—the farmers, mechanics and laborers—who have neither the time nor the means of securing like favors to themselves.”

The recharter bill went back to Congress, where despite steadfast support from Clay and Daniel Webster, it did not have the two-thirds majority support necessary to override Jackson’s veto. The battle over the Bank became a central issue in the presidential campaign that year, in which Jackson soundly defeated Clay to win a second term.

Aftermath of the Bank War

To weaken the Bank before its charter ran out, Jackson ordered that all U.S. government deposits be withdrawn and deposited in various state-chartered banks. In response, Biddle restricted the Bank’s loans, tightening the nation’s money supply in an effort to inspire public outrage toward Jackson’s policies and force the recharter.

Instead, Biddle’s plan backfired, and the ensuing financial distress inspired greater suspicion of the Bank’s power.

As the Bank War continued, Jackson’s opponents organized the Whig Party, named after the British term for opponents of monarchical power. In 1834, the Whig-dominated Senate formally censured Jackson for removing the federal deposits, an action that Jackson’s supporters—who now called themselves Democrats—voted to remove from the Senate record as soon as they gained control in 1837.

Panic of 1837

The charter of the Second Bank of the United States expired in 1836, and a defeated Biddle accepted an offer from Pennsylvania to turn it into a state-chartered bank. With the removal of the Bank as a regulating force, state banks began printing currency and lending money in exorbitant amounts.

The resulting high inflation, and Jackson policies favoring hard currency (gold or silver) led many investors to panic and many banks to close due to insufficient reserves, in a financial crisis known as the Panic of 1837.

Jackson’s Democratic successor, Martin Van Buren, proposed the establishment of a new independent treasury system, which would fulfill Jackson’s goal of separating the nation’s finances from its government.

Repealed by Whigs in 1841 after Van Buren’s loss to William Henry Harrison, the Independent Treasury Act was signed back into law by Democratic President James K. Polk in 1846. This independent treasury system would function until 1914, when it was replaced by today’s Federal Reserve

READ MORE: Why Andrew Jackson's Legacy is So Controversial


Daniel Feller. “King Andrew and the Bank.” Humanities, January/February 2008.
Marsha Mullin. “Andrew Jackson and the Bank War.” Andrew Jackson’s Hermitage.
K.C. Tessendorf. “Nicholas Biddle & Andrew Jackson in the Case of the Strangled Bank.” Financial History, Issue 65 (1999).