Financial History Issue 116 (Winter 2016) | Page 30

THE

BANK
WAR
By Paul Kahan
In the wake of the Great Recession of
2008, voices on both the right and the
left criticized the Federal Reserve, often
arguing that it exercised too much control
over the American economy. Some went
so far as to call for the Fed’s abolition and
for the United States to return to the gold
standard. A few semesters later, during a
lecture on Jacksonianism in my introduction to American history class, a student
commented that history was repeating
itself, noting that the rhetoric and concerns about the Bank War were reflected
in memes he saw on the Internet.
That the Bank War is a crucial turning point in the political history of the
United States is unquestionable. As historian David Kinley noted more than a
century ago, the conflict over the Bank
of the United States was fought “with a
violence of partisan feeling that entered…
[few other] discussions which determined
measures that were to be worked into our
political life.” Though professional historians are well aware of the Bank War’s
importance to American political and economic history, few Americans today know
that the Bank War and its aftermath led to
the first congressional censure of a President, the first Senate rejection of a cabinet
nominee, the first use of the filibuster in
US history and at least one fatal duel.
Congress had chartered the First Bank
of the United States (BUS) for 20 years in
1791, but President James Madison allowed
the institution’s charter to expire in 1811.
The outbreak of the War of 1812 and
the economic chaos it wrought convinced

Andrew Jackson,
Nicholas Biddle
and the Fight for
American Finance
Andrew Jackson

Nicholas Biddle

many of the bank’s most ardent opponents
that the country needed a central bank, so
in 1816, Congress granted the Second Bank
of the United States a 20-year charter.
Though many of the BUS’s opponents
recognized the need for a central bank,
they did so only grudgingly. Moreover,
some policy missteps during the Panic
of 1819 fostered animosity toward the
BUS, particularly in the South