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King Andrew’s Bank War

Cartoon of Andrew Jackson from anonymous artist circa 1832, used in campaign posters.

Cartoon of Andrew Jackson by an anonymous artist circa 1832, used in campaign posters. PD-US.

Last week I blogged about President Martin Van Buren’s Independent Treasury Act and the partisan rancor surrounding the legislation that ensued through the three subsequent elections. The independent Treasury was the culmination of a bitter partisan battle that was rooted in Andrew Jackson’s fight against the Bank of the United States. On July 10, 1832, President Jackson delivered his veto of the re-charter of the Second Bank to Congress, triggering a Bank War and the formation of the Whig and Democratic Parties. The Bank War was at its core a battle over how Capitalism should be organized and what the role the state should play in managing the economy. The veto also became the key issue in the 1832 election between Jackson and Senator Henry Clay.

To be sure, the Bank of the United States was barely an issue in the 1828 election between Jackson and John Quincy Adams, though Adams’ platform included a strong national bank to regulate the economy. Instead, the 1828 election focused more on the character of the candidates and intense personal attacks. Jackson only began a two-fold concerted attack on the Bank once he assumed office. To Jackson, the Bank threatened liberty and symbolized corruption, political oppression and privilege. Jackson also argued that the Bank was unconstitutional because Congress didn’t have the power to charter corporations and exclude them from government regulation or taxation, although the Supreme Court had previously rejected this argument in the landmark case of McCulloch v. Maryland in 1819. Nonetheless, Jackson reiterated his opposition to the Bank on these grounds in his annual messages in 1830 and 1831.

In 1832, Bank President Nicholas Biddle, who had incensed Jackson when Biddle approached him in 1829 with an early request to re-charter, worked behind the scenes with Senator Clay on legislation to re-charter the Bank. The move of course confirmed Jackson’s concerns about the Bank’s meddling in politics. Congress passed the bill, but without the two-thirds necessary to override the President’s veto.

Jackson’s veto message was, in historian Daniel Feller's words, the “the rhetorical apex of his presidency.” The message pitted rich against poor and solicited working “farmers, mechanics, and laborers” against the “rich and powerful.” In the following passage of the Bank Veto message to Congress, Jackson assails exclusivity and favoritism, essentially evoking the language of class warfare:

It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society-the farmers, mechanics, and laborers-who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government. There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing.

Jackson’s veto was sustained and he handily won re-election in 1832, garnering 219 of the 286 electoral votes cast. However, vetoing the Bank’s re-charter also created severe economic instability, especially as Jackson began to withdraw funds from the Bank and deposit them in state-charted banks. As discussed last week, ultimately the dispersal of funds and their use for speculation by state banks led to the Panic of 1837.

The veto message, however, has enjoyed resounding political relevance across time. The Democratic and Republican Parties today continue to struggle over the same basic issue on which Jackson fought the Bank: the government’s role in economic affairs. Furthermore, Jacksonian rhetoric summoning “the humble members of society” has been invoked by a long line of Democratic candidates – from William Jennings Bryan (see our Cross of Gold post) to Franklin D. Roosevelt to Lyndon Johnson. Of course the key difference between Jackson and 20th century Democratic presidents lay in Franklin Roosevelt’s New Deal re-definition of liberalism to mean active government involvement in economic affairs to protect the little guy. One can also observe the rich versus working class divide in President Barack Obama’s rhetoric, most recently in his call yesterday for an extension of tax cuts for the middle class, but expiration for higher-income earners. It is also apparent in the Obama campaign’s strategy calling for more transparency regarding Mitt Romney’s wealth and attacks on his tenure at Bain Capital.

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