succeeded Cheves as president of the Second Bank of the United States. Biddle
changed the bank's focus back to the conservative approaches that favored the Northeast to the detriment
of the speculative South and West. His strategy improved America's financial condition and stabilized the
money supply, although it stifled growth in the South and West.
In 1829, the election of
as president of the United States brought the bank to the center of
Americans' attention. As a Southerner and a strong believer in Jefferson's state-oriented view of
government, Jackson was an outspoken enemy of the bank, although he refrained from meddling in the
bank's affairs during his first term. Biddle made a major tactical blunder in 1832, however, by calling for
Congress to renew the charter for the Second Bank of the United States for another 20 years—four years
earlier than necessary. Despite growing national resentment of the bank, Congress approved the renewal
but Jackson vetoed it and made the bank the major issue of his reelection campaign later that year.
Jackson's Bank War, as it came to be called, quickly became an extremely divisive partisan issue, with
Democrats supporting Jackson and Whigs supporting the bank.
The controversy continued after Jackson won reelection, as the president and Congress battled over the
issue. Exercising his executive power, Jackson quietly began removing federal deposits from the bank and
placing them in state-chartered banks (also known as
). When the bank's charter expired in 1836,
it was forced to close its doors once again. Biddle reopened the bank as a state bank that same year.
Although the bank was initially successful, it failed in 1841 after investing in a speculative cotton venture that
The dissolution of the Second Bank of the United States in 1836 sparked another disastrous economic cycle
for the country. By 1837, wild speculation, fueled mostly by inflated bank notes, initiated a serious financial
depression. Without a central bank to stabilize the currency, the depression ran its course well into the mid-
1840s. Wild swings in currency values continued intermittently until 1863, when Congress passed the
National Currency Act, requiring that all currency, including bank notes, be backed by the U.S. Treasury.
Finally in 1913, Congress formed the Federal Reserve Bank, giving the United States a federally owned,
"Bank of the United States." American History
. 2007. ABC-CLIO. 19 Mar. 2007
After the War of 1812, the state banking system was in turmoil. Congress tried to restore
order and finance debts from the war by establishing a second Bank of the United States.
Like the First Bank, it was given a 20-year charter.