Jackson, the Bank War, and the Legacy of the Second Bank of the United States
AEA Papers and Proceedings
vol. 111,
May 2021
(pp. 501-07)
Abstract
President Jackson vetoed the bill to recharter the Second Bank of the United States on July 10, 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 backup 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.Citation
Rousseau, Peter L. 2021. "Jackson, the Bank War, and the Legacy of the Second Bank of the United States." AEA Papers and Proceedings, 111: 501-07. DOI: 10.1257/pandp.20211095Additional Materials
JEL Classification
- N21 Economic History: Financial Markets and Institutions: U.S.; Canada: Pre-1913
- N11 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: U.S.; Canada: Pre-1913
- E58 Central Banks and Their Policies
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- N41 Economic History: Government, War, Law, International Relations, and Regulation: U.S.; Canada: Pre-1913
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior