Second Bank of the United States
| Headquarters | Philadelphia , Pennsylvania , United States |
| founding | 1816 |
| Dissolution / merger | 1836 |
| country | the United States |
| currency | |
| ISO 4217 | USD |
| predecessor | |
| successor | |
| List of central banks | |
The Second Bank of the United States ( German " Second Bank of the United States " ) was founded in 1816, five years after the Charter of the First Bank of the United States expired. The motivation for the establishment was the stabilization of the American currency. The “Second Bank” largely corresponded to the “First Bank” in terms of its task and structure. The constitutionality of a central bank was in the McCulloch v. Maryland from the side of the Supreme Court of the United States confirmed. The ruling also annulled all state laws that prevented the establishment or operation of a central bank . Its president was Nicholas Biddle , a well-educated upper class with a passion for banking.
However, Andrew Jackson's presidential veto prevented the renewal of the Second Bank's charter , and a slow process of dissolution began that ended when the charter expired in 1836. The existence of a central bank became a major campaigning issue in the 1832 American presidential election, with Jackson being supported by the Democrats and Biddle by the newly formed Whig Party . Jackson won the election and the charter was never renewed. Biddle, however, re-legitimized by a federal charter, continued his work. Tensions were still high when President John Tyler vetoed a Whig Party legislative initiative to restore a central bank.
The controversy
Second Bank stayed in the public mind primarily because of allegations of corruption and counterfeiting activities. The president of Second Bank, William Jones , who was also a personal friend of James Madison , had to declare bankruptcy himself in 1815. He took no action against politically motivated lending and loaned money to the American Congress without, however, insisting on repayment. Under his leadership, the activities of the various branches were poorly monitored and there was widespread uncertainty and chaos, particularly in the Baltimore branch .
During this time there was a post-war economic boom. Due to the destruction caused by the Napoleonic Wars in Europe there was a great demand for American agricultural products. The Second Bank supported this boom by lending largely uncontrolled, which was often used for land speculation . At that time it was practically possible for anyone to get a loan and speculate on rising farmland prices. This resulted in a massive rise in the price of land, sometimes two or three times the pre-war level. In 1819 alone, 220,000 km² of land changed hands. Because of this boom, widespread fraud in the bank went undetected for a long time.
However, when the overheating of the market and the resulting uncertainty in the Second Bank's loans became apparent in 1818, the managers of the Second Bank adopted a policy of consolidation and demanded repayment of many of the loans. This, combined with the decline in demand for American agricultural products in a slowly recovering Europe, led to the economic crisis of 1819 and the situation that emerged in the McCulloch v. Maryland culminated.
Maryland had a policy of limiting banking activities by requiring any non-chartered bank to pay a tax of either 2% of all deposits or a lump sum of $ 15,000 to the treasury. Of course, the Second Bank branch in Baltimore was also affected. McCullogh took the state to court over it. The matter has been negotiated on all legal levels up to the Supreme Court.
The slow collapse
President Jackson viewed Second Bank as one of the main culprits of the economic crisis due to its widespread corruption and fraudulent activity, and is viewed by many as the initiator of Second Bank's slow collapse. Although the bank's charter was not due to expire until 1836, Jackson intended to restrict the bank's activities much earlier.
Second Bank made large profits from the federal government's deposit of tax revenue. Jackson curtailed Second Bank's secure source of income by increasingly depositing federal tax revenues in "Pet Banks" (so-called because of their loyalty to Jackson's Party). This quickly led to losses at the Second Bank. In a final attempt to save his bank, Nicholas Biddle demanded all loans and decreed that no further loans would be granted. This caused anger among many of the Second Bank's customers, who tried to force Biddle to revert to his previous lending policy. With the loss of one of its main sources of income, Second Bank now had too little capital and no longer played a major role. When the bank's charter expired in 1836, it became a regular Philadelphia bank before filing for bankruptcy five years later.
The historical assessment of Jackson’s policies is difficult. Some of Jackson's supporters were outraged and accused Jackson of waging a personal campaign of revenge against the bank. Jackson's justification for his veto is partly populist:
“It appears that more than a fourth part of the stock is held by foreigners, and the residue is held by a few hundred of our own citizens, chiefly of the richest class. For their benefit does this act exclude the whole American people… It is but justice and good policy, as far as the nature of this case will admit, to confine our favors to our own fellow-citizens. "
“Obviously, foreigners hold over a quarter of the shares, and the rest [only] a few hundred of our own citizens - mostly from the very rich. For their benefit [only], this law excludes the entire American people [from participating in its monetary system] ... It is only just and well founded to the extent that the nature of this case permits our privileges to be limited to our own fellow citizens. "
This populist passage in Jackson's explanation led Nicholas Biddle to speak of a "manifesto of anarchy". However, Massachusetts Congressman Daniel Webster saw Jackson's speech as a political message and campaign document for Jackson's re-election in 1832. The anti-Jackson forces joined forces and channeled their anger by founding the Whig Party in 1834.
Building
The former headquarters of the Second Bank of the United States in Philadelphia has been on the National Register of Historic Places since May 4, 1987 . On the same day, the structure was awarded the status of a National Historic Landmark .
literature
- Jane Ellen Knodell: The Second Bank of the United States: “Central” banker in an era of nation-building, 1816–1836. Routledge, New York 2017, ISBN 978-1-1387-8662-2 .
Web links
Individual evidence
- ^ Second Bank of the United States on the National Register of Historic Places , accessed February 14, 2020.
- ↑ Listing of National Historic Landmarks by State: Pennsylvania. National Park Service , accessed February 14, 2020.
Coordinates: 39 ° 56 '54.9 " N , 75 ° 8' 55.2" W.