Second Bank of the United States

From Conservapedia
Jump to: navigation, search

The Second Bank of the United States was created in 1816 to alleviate many of the economic troubles the United States faced after the War of 1812. The bank was founded on a 20-year charter granted by Congress and 35 million dollars (about 420 million in 2007 dollars), seven million of which was granted by the federal government. The bank was to serve as a repository for federal funds and was tax-exempt in all states. In return, the Bank had to allow the government to appoint five of its twenty-five directors and perform transactions for the government without payment.

In its first three years of existence, the Second Bank of the United States had many troubles and neared bankruptcy. Then, in 1819, Langdon Cheves was made president of the bank, and he began a reorganization of the whole entity. He stopped the rampant loaning of capital to speculators whose ability to repay the loans was questionable, which was chief among the many problems plaguing the bank. Though his efforts saved the Bank, they contributed to the economic downturn that occurred that year, known as the Panic of 1819.

In the 1820s, Nicholas Biddle became the president of the Bank. He ended many of Cheves' reforms which were seen to have been the main cause of the Panic of 1819. Biddle ran the Bank with an air that earned him the name "Tsar Nicholas" and the resentment of the Jacksonian Democrats, mainly because of the enormous power he wielded.

In 1832, the battle for the Bank's continued existence began. Henry Clay urged Biddle to submit the Second Bank's recharter four years earlier than was required. Clay knew that the decision to pass it would come to President Andrew Jackson, whose support consisted of a combination of elites and common people. Clay, a rival of Jackson, believed that the president would be forced to choose between the elites, who favored the bank, and the others, who loathed it, and that either choice would doom his reelection. Not surprisingly, Jackson vetoed the Bank's recharter. However, Clay had overestimated the power of the elites, and Jackson was easily reelected without them.

Jackson ended the Second Bank of the United States because he believed that it held too much power over the common people and was therefore an impediment to liberty in the United States.