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Economic History Association

Jackson, Biddle, and the Bank of the United States


Author(s): Bray Hammond
Source: The Journal of Economic History, Vol. 7, No. 1 (May, 1947), pp. 1-23
Published by: Cambridge University Press on behalf of the Economic History Association
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THE JOURNAL OF ECONOMIC HISTORY
VOL. VII MAY 947
9 NO. I

Jackson,Biddle,and the Bankof the UnitedStates


M WORE than forty yearshave passedsince Catterall'smonograph
on the second Bank of the United Stateswas published,and,
though that accounthas neverbeen superseded,it antedatesall recent
literatureon centralbankingand thereforepresentsinadequatelythe
public purposesof the bank. Furthermore,it includesnothing about
the bank'sPennsylvaniasuccessor,which failed, and thus omits the
denouementof Biddle'sconflictwith Jackson.The inevitableeffectof
the failure,in the rough justiceof history,was to make Jacksonseem
right and Biddlewrong; and this impression,especiallyin the absence
of attentionto the purposeand functionsof the bank,seemsin recent
yearsto have been strengthened.I think it needs correction.

I
The Bank of the United States-the B.U.S. as Biddle and others
often called it-was a nationalinstitutionof complexbeginnings,for
its establishmentin i8i6 derivedfrom the extremefiscalneeds of the
federalgovernment,the disorderof an unregulatedcurrency,and the
promotionalambitionsof businessmen.'The bank had an immense
amount of private business-as all central banks then had and as
many still have-yet it was even more definitelya governmentbank
than was the Bank of England, the Bank of France, or any other
similar institutionat the time. The federal governmentowned one
fifth of its capitaland was its largestsingle stockholder,whereasthe
capitalof othercentralbankswas wholly private.Governmentowner-
ship of central-bankstock has become common only in very recent
years.2Five of the bank's twenty-fivedirectors,under the terms of
'On the organization of the bank, besides R. C. H. Catterall, Second Bank of the U.S.
(Chicago: The University of Chicago Press, 1903), see Raymond Walters, Jr., "Origin of the
Second Bank of the U.S.," The Journal of Political Economy, LIII (945), II5..
2The Bank of England and the Bank of France came under government ownership in 1945.
The modern term "central bank" was not used till nearly a century after Biddle's death.
Hamilton used the term "public bank," and the nineteenth-century equivalent was "bank of
issue."
T

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2 Bray Hammond
its charter,were appointedby the Presidentof the United States,and
no one of these five might be a directorof any other bank. Two of
its.three successivepresidents-WilliamJones and Nicholas Biddle-
were chosen from among these governmentdirectors.The charter
made the bank depositoryof the governmentand accountableto
Congressand the Secretaryof the Treasury.
On this depositoryrelation hinged control over the extension of
creditby banksin general,which is the essentialfunctionof a central
bank.The government'sreceiptsaroseprincipallyfrom taxes paid by
importersto customscollectors; these tax paymentswere in bank
notes,the use of checksnot then being the rule; the bank notes were
mostlythoseof privatebanks,which were numerousand providedthe
bulk of the money in circulation;the B.U.S. receivedthese notes on
depositfrom the customscollectorsand, becomingtherebycreditorof
the privatebanksthatissuedthem,presentedthem to the latterfor pay-
ment. Banksthat extendedcreditproperly-and maintainedadequate
gold and silver reserveswere able to pay their obligationspromptly
on demand. Those that overextendedthemselves were not. The
pressureof the central bank upon the private banks was constant,
and its effectwas to restricttheir lending and their issue of notes. In
this fashion,it curbedthe tendencyof the banks to lend too much
and so depreciatetheir circulation.4Its regulatory powers were
dependenton the privatebanks'falling currentlyinto debt to it. The
regulatorypowersnow in effectunderthe FederalReserveAct depend
upon the oppositerelation-that is, upon the privatebanks'maintain-
ing balanceswith the Federal Reserve Banks. The private banks
were then debtorsto the centralbank; they are now creditors.The
regulatorypowers of the United States Bank were simpler, more
direct,and perhapsmore effectivethan those of the FederalReserve
Banks, though they would not be so under present-dayconditions.
It was notoriousthat large and influentialnumbersof the private
banksand officialstatebanksresentedthis regulationof their lending
power.All but the moreconservativefound it intolerableto be let and
3E. R. Taus, Central Banking Functions of the U.S. Treasury, 1789-1941 (New York:
Columbia University Press, 1943), Appendix III and IV; Davis R. Dewey, Financial History of
the U.S. (New York: Longmans, Green and Company, 1931), p. i68; John Spencer Bassett,
The Life of Andrew Jacksonr(New York: The Macmillan Company, 1931), p. 586.
4 I use the term "private banks" in preference to the common term "state banks" because it
brings out the essential differences between the central bank and the units of the banking
system regulated by- it. I therefore include as private those "state banks" proper owned in
whole or part by state governments; for functionally these "state banks" proper differed little
if any from the private banks.

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Jackson,Biddle, and the United StatesBank 3
hinderedby the dunning of the B.U.S. and forced to reduce their
debts instead of enlarging their loans. Many of them had the
effronteryto insist as a matterof right that they be allowed to pay
the central bank if and when they pleased.5The effort of various
states,especiallyMarylandand Ohio, to levy prohibitorytaxes on the
United StatesBank'sbranchesreflectsthis desireof the privatebanks
to escaperegulationquite as much as it reflectsthe states'jealousyof
their "invaded"sovereignty;the efforts were economic as well as
political.'
In i83i, Gallatincommendedthe bank for its conductduring the
twenties; it had "effectuallychecked excessiveissues"by the state
banks;"thatverypurpose"for which it had beenestablishedhad been,
fulfilled. On the regulatoryoperationof the bank, "which requires
particularattentionand vigilanceand must be carriedon with great
firmnessand due forbearance,dependsalmostexclusivelythe stability
of the currency. . . ." The country's"reliancefor a sound currency
and,therefore,for a just performanceof contractsrestson that institu-
tion."7 In i833. he wrote to HorsleyPalmer,of the Bank of England;
that "theBank of the United Statesmust not be consideredas afford-
ing a completeremedy,"for the ills of overexpansion, "butas the best
and most practicable which can be applied";and its action "hadbeen
irreproachable" in maintaininga properreserveposition "as late as
Novemberi830." 8 Though Gallatindid not say so, this was in effect
praiseof NicholasBiddle'sadministrationof the bank.
The powerfulexpansionof the economyin the nineteenthcentury
made it necessaryfor the regulatoryaction of the bank to be mostly
one of restraint,but there was occasionalso for it to afford ease as
holder of the ultimatereservesand lender of last resort.One of the
first things it did was to end the generalsuspensionthat the country
had been enduringfor more than two years;and a crucialfactor in
the willingnessand abilityof the privatebanksto resumepaymentof
their obligationswas the pledge of the United States Bank that it
would supportthem.9 This, Vera Smith writes, was "a very early

5R. C. H. Catterall, Second Bank, p. 85.


6McCulloch v. Maryland (i8i9), 4 Wheaton, p. 3I5; Osborn v. Bank of the United States
(1824), 9 Wheaton, p. 737. The arguments in these cases were constitutional, not economic.
7 Albert Gallatin, Writings, ed. Henry Adams (Philadelphia: J. B. Lippincott and Company,
I879), III, 334, 336, 390; II, 426.
8lbid., II, 46i. See also Niles' Weekly Register, XXXV (i828-29), 37.
9 R. C. H. Catterall,Second Bank, pp. 24-26; American State Papers, Finance (Washington:
Gales and Seaton, I858), IV, 768-69.

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4 Bray Hammond
declarationof the view that it is the duty of the centralbank to act as
lenderof last resort."10
The regulatoryfunctionsof the bank were not always well per-
formed. Its first president,William Jones, was a politician who
extendedcredit recklessly,renderedthe bank impotent to keep the
privatebanks in line, and nearly bankruptedit-all in a matter of
threeyears.LangdonChevesput the bank back in a sound condition
by sternproceduresthat were unavoidablyunpopular.When Nicholas
BiddlesucceededChevesin i823, the bankwas strongin everyrespect
but good will. Biddle repressedthe desires of the stockholdersfor
larger dividends,keeping the rate down and accumulatingreserves.
The art of centralbanking was not so clearlyrecognizedthen as it
has since become,but Biddle advancedit, and with better luck he
might well be memorablefor having developedmeans of mitigating
the tendencyto disastrous,periodiccrises characteristicof the nine-
teenthcenturyin the United States.1'
But Biddle,with all his superiortalents,was not very discreet.He
had an airyway of speakingthat shockedhis more credulousenemies
and did him irreparable harm;and,when he describedthe functionsof
the bank,he contrivedto give a livelierimpressionof its power than
of its usefulness.Once when asked by a Senate committee if the
B.U.S. ever oppressedthe state banks, he said, "never":although
nearlyall of them might have been destroyed,many had been saved
and still more had been relieved.This was ineffablein a man of
Biddle'sexceptionalabilities.It put a normal situationin a sinister
and uncouthlight. A wanton abuse of regulatorypowers is always
possible,and abstentionfrom it is not to be boastedof-any morethan
a decentman would boastof not choosingto be a burglar.By talking
so, Biddlemade his opponentsfeel sure he had let the cat out of the
bag. For Thomas Hart Benton he had proved entirely too much
that he had a dangerouspower "over the businessand fortunes of
nearly all the people."12 Jackson referredin his veto to Biddle's
remark,and RogerTaney was still shudderingat the disclosuremany
years later. He believed then and he believed still, he wrote, that
10
Vera C. Smith, Rationale of Central Banking (London: P. S. King and Son, 1936), p. 40.
"1Statements on Biddle's central-bank policy will be found in Reginald C. McGrane,
Correspondenceof Nicholas Biddle (Boston: Houghton Mifflin Company, 1919), pp. 34-36,
51, 56-58. Catterall discusses the subject admirably in his chapter v, with the limitation that
central banking was no better understood in his day than in Biddle's-if as well. See also J. S,
Bassett, Andrew Jackson, pp. 585-86.
12 T. H. Benton, Thirty Years' TView(New
York: D. Appleton and Company, 1897), I, 159.

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Jackson,Biddle, and the United StdtesBank 5
therewas a schemeto closeeverystatebankin the Union. He believed
"thatthe matterhad been thought of, and that the mannerin which
1 That people believedsuch
it could be done was well understood."
things,Biddlehad his own jauntiness,naivete,and politicalineptitude
to thank.
II
When Jacksonbecamepresidentin i829, the B.U.S. had survived
what then seemedits most crucialdifficulties.The SupremeCourthad
affirmedand reaffirmedits constitutionalityand ended the attempts
of unfriendly states to interfere with it. The Treasuryhad long
recognizedits efficientservicesas officialdepository.The currencywas
in excellentcondition.Yet in his first annual message,Jacksontold
Congressthat "boththe constitutionalityand the expediencyof the
law creatingthe bank were well questionedby a large portionof our
fellow-citizens,and it must be admittedby all that it has failed in the
greatend of establishinga uniformand soundcurrency."
There is nothing remarkableabout Jackson'sdoubtsof the bank's
constitutionality,for he did not defer his own judgment to John
Marshall'snor, in general,had the SupremeCourt'sopinionsattained
theirlaterprestige."4 His statementthat the bank had failed in estab-
lishing a good currencyis more difficultto understand,for it was
plainlyuntruein the usual sense of the words. But he was evidently
using the wordsin the specialsenseof locofocohard-moneydoctrine,
accordingto which the only good money was gold and silver; the
ConstitutionauthorizedCongressto coin it and regulateits value;the
stateswere forbiddento issue paperand the federalgovernmentwas
not empoweredto do so. Jackson,wrote C. J. Ingersoll,"considersall
the state banksunconstitutionaland impolitic and thinks that there
should be no currencybut coin . . . ." '5 There were practicalcon-
siderationsno less importantthan the legal. It was evident to the
antibankpeoplethat bankingwas a meansby which a relativelysmall
numberof personsenjoyedthe privilegeof creatingmoney to be lent,
for the money obtainedby borrowersat banks was in the form of
13 C. B. Swisher, Life of Taney (New York: The Macmillan Company, 1935), pp. i66-69.
14Even Gallatin in I831 took pains to defend the bank's constitutionality without a
reference to the court's decisions, of which he. remarked in a footnote he had not known.
Gallatin, Writings, III, 327. He was in Europe when McCulloch v. Maryland was decided, but
not Osborn v. Bank of the United States. It is notable that he would discuss constitutionality
without learning till he was through that the Supreme Court had said something.on the subject.
15 R. C. McGrane, Correspondenceof Biddle, 172. For Benton's ideas, see his Thirty Years'
View, I, 436.

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6 Bray Hammond
the banks' own notes. The fruits of the abuse were obvious:notes
were overissued,their redemptionwas evaded,they lost their value,
and the innocenthusbandmanand mechanicwho were paid in them
were cheatedand pauperized."It is absurd,"wrote Taney, "to talk
abouta soundand stablepapercurrency." 16 There was no such thing.
So, in Jackson'sopinion,if the United StatesBankwas not establishing
a metalliccurrency,it was not establishinga constitutionalor sound
and uniformone. His words might seem wild to the contaminated,
like Gallatinand Biddle,but they were plaingospeltruthto his sturdy
antibank,hard-moneyagrarians.17
Hard moneywas a cardinaltenetof the left wing of the Democratic
party.It belongedwith an idealismin which Americawas still a land
of refuge and freedomratherthan a place to make money. Its aim
was to clip the wings of commerceand finance by restrictingthe
credit that papermoney enabledthem to obtain.There would then
be no vast debt, no inflation,no demoralizingprice changes; there
would be no fluctuantor disappearingvalues, no swollen fortunes,
and no grinding poverty. The precious metals would impose an
automaticand uncompromisinglimit on the volatile tendenciesof
trade."Whentherewas a gold and silvercirculation," said an agrarian
in the Iowa constitutionalconventionof i844, "therewere no fluctua-
tions; everything moved on smoothly and harmoniously." 8 The
Jacksonianswere even more devoted to the disciplineof gold than
the monetaryconservatives of the presentcentury.
There was also a pro-bank,"paper-money wing," which harbored
the Democraticparty'sless spiritualvirtues.19Its strength lay with
free enterprise,that is, with the new generationof businessmen,
promoters,and speculators,who found the old Hamiltonianorderof
the Federaliststoo stodgy and confining.These were "Democratsby
trade,"as distinguishedfrom "Democratsin principle";one of the
latterwrote sarcasticallyin the DemocraticReviewin i838, "Beinga
good Democrat,that is to say, a Democratby trade (Heaven forefend
that any son of mine should be a Democratin principle)-being a
16J. S. Bassett, Correspondenceof Andrew Jackson (Washington, D.C.: Carnegie Institution,
1931), V, 49I; Benton, Thirty Years' View, I, 436.
17The principal argument against the bank's constitutionality was not this, of course, but
that Congress had no power to charter a bank outside the District of Columbia.
18 Benjamin F. Shambaugh, Fragments of the Debates of the Iowa Constitutional Conven-
tions of 1844 and 1846 (Iowa City: State Historical Society of Iowa, i900), pp. 69, 70, 7I.
19 Col. Benton on Banks and Currency, Hunt's Merchants' Magazine, XXXVIII (January
I858), 560-6i.

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Jackson,Biddle, and the United StatesBank 7
good Democratby trade,he got a snug slice of the publicdeposited."20
Fifty yearsbefore,businesshad fosteredthe erectionof a strongfederal
governmentand inclined toward monopoly;in the early nineteenth
centuryit began to appreciatethe advantagesofferedby laissez faire
and to feel that it had more to gain and less to fear from the states
thanfromthe federalgovernment.This led it to take on the coloration
and vocabularyof Jacksoniandemocracyand to exalt the rugged
individualismof the entrepreneurand speculatoralong with ,that of
the pioneer.
The privatebanks and their friends had helped to kill the first
Bank of the United Statestwenty yearsbefore,but the strengththey
could musteragainstthe second was much greater.Herein lies the
principal differencebetween the situation of the old bank when
Jeffersonbecamepresidentin i8oi and the situationof the second
when Jacksonbecamepresidentin i829. Both men disapprovedof
the nationalbankand yet were inhibitedby its being acceptedin their
own party and performingwell its evidently importantfunctions.
There were also the differencesthat Jeffersonwas more amenableto
reasonthan Jackson,that he had in Gallatina betteradviserthan any
Jacksonhad, and that the bank was under a more passivemanage-
ment in his day than in Jackson's.But of most importancewas the
greaterpressurethe privatebankswere able to exertin Jackson'stime
than in Jefferson's.Between i8oi and i829 their numberhad greatly
increased,as had the volume of their businessand the demand for
credit.The recordsindicatethat in i8oi therewere 3i banks,in I829
therewere329, and in i837 therewere788-an increaseof I40 per cent
during Jackson'sadministrationalone.2' These banks were associated
to a markedextentwith the Democraticparty,especiallyin New York.
Their oppositionto federal regulationwas thereforefar greaterin
I829- than in i8oi, and it did more for Jackson'svictory over the
national bank than did the zeal of his hard-money locofocos.
De Tocquevillewrote that "the slightestobservation"enabledone to
see the advantagesof the B.U.S. to the country and mentionedas
most strikingthe uniformvalue of the currencyit furnished.But the
privatebanks, he said, submittedwith impatienceto "this salutary
control"exercisedby the B.U.S.They boughtover newspapers."They
20 The United States Magazine and Democratic Review (Washington: Langtree and

O'Sullivan, December i838), III, 368. Alexander Hamilton's son, James A. Hamilton, a friend
of Jacksonand a speculatorin New York real estate, seems to have been a Democrat by trade.
21 United States Comptrollerof the Currency, Annual Report, i9i6, pp. 9I3-I4.

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8 Bray Hammond
roused the local passionsand the blind democraticinstinct of the
countryto aid their cause.... 22 Withoutthem, it is doubtfulif the
Jacksonianscouldhave destroyedthe B.U.S.
The Jacksonianeffort to realize the hard-moneyideals was admir-
able,viewedas Quixotism.For howevermuch good one may find in
theseideals,nothingcouldhavebeen moreunsuitedthan they were to
the Americansetting. In an austereland or among a contemplative
and self-denyingpeople they might have survivedbut not in one so
amply endowedas the United Statesand so much dominatedby an
energeticand acquisitiveEuropeanstock.Nowhere on earth was the
spirit of enterpriseto be more fierce,the urge for exploitationmore
restless,or the demandfor creditmoreimportunate.The rise of these
reprobatedforces spurredthe agrarians,and as businessitself grew
they cameto seeknothingless than completeprohibitionof banking.2"
Yet they chose to destroyfirst the institutionwhich was curbingthe
ills they disapproved,and to that end they leaguedwith the perpetra-
tors of thoseills.24Jacksonmade himself,as de Tocquevilleobserved,
the instrumentof the privatebanks.25 He took the government'sfunds
out of the central bank, where they were less liable to speculative
use and put them in the privatebanks,where they were fuel to the
fire.26He pressedthe retirementof the publicdebt, and he acquiesced
These thingsfomentedthe very
in distributionof the federalsurplus.27
evils he deploredand made the Jacksonianinflationone of the worst
in Americanhistory.They quite outweighedthe Maysvilleveto, which
checkedfederalexpenditureson internalimprovements,and the specie
circular,which crudelyand belatedlyparalyzedbank credit.
As a result,Jackson'spresidencyescapedby only two monthsfrom
22 Alexis de Tocqueville, Democracy in America, ed. Phillips Bradley (New York: Albert A.
Knopf and Company, 1945), I, 409.
23 In a number of western states and territories they achieved prohibition: in Arkansas,
Illinois, Iowa, Wisconsin, California, and Oregon-though in the last two the impetus was
more than agrarian.
24 T. H. Benton, Thirty Years' View, I, i58.
25 Alexis de Tocqueville, Democracy in America, I, 409.
26 Taney made himself ridiculous: he told the pet banks the government funds would

enable them to lend more, he gave them checks on the B.U.S. to protect them from the monster,
and then he helplessly asked them not to use the checks.-R. C. H. Catterall, Second Bank, pp.
302-5. United States Secretaryof the Treasury,Annual Reports (i833), III, 369; 23d Congress,
ist Session, Senate Document No. r6, 32I If.
27 Retirement of the public debt was inflationaryin that it spread a feeling of elate satisfac-
tion and closed a field for conservativeinvestment. Gallatin had thought the retirement would
be a good thing but later found to his dismay that it was "a signal for an astonishing increase
in the indebtedness of the community at large."-Henry Adams, Life of Albert Gallatin
(Philadelphia: J. B. Lippincott and Company, i879), p. 656.

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Jackson,Biddle, and the United StatesBank 9
ending like Hoover'sin 1933. Far from reaching the happy point
where the privatebanks could be extirpatedand the hands of the
exploitersand speculatorscould be tied, Jacksonsucceededonly in
leavingthe houseswept and garnishedfor them; and the last stateof
the economywas worsethan the first.He professedto be the deliverer
of his people from the oppressionsof the mammoth-but insteadhe
deliveredthe privatebanks from federal control and his people to
speculation.No more striking example could be found of a leader
fosteringthe very evil he was angrilywishing out of the way.28
But this was the inevitableresultof the agrarianeffortto ride two
horsesbound in oppositedirections:one being monetarypolicy and
the other states' rights. Monetarypolicy must be national, as the
Constitutiondoublyprovides.The agrarianswanted the policy to be
nationalbut they eschewedthe practicableway of makingit that,and,
instead of strengtheningthe national authorityover the monetary
system, they destroyedit. Where they were unencumberedby this
fatal aversionto centralizedpower, they accomplishedconsiderable.
In Indianathey set up an officialState Bank, with branches,which
from i834 to I853 was the only sourceof bank creditpermittedand
yet was ample for all but the most aggressivemoney-makers,who
finally ended its monopoly.In Missouri,they establishedthe Bank
of Missouri,with branches,a state monopolywhich lastedfrom i837
to I857, when it too succumbedto free enterprise.And in Iowa,
anothermonopoly,the Bankof Iowa,with branches,was in operation
from i858 till i865, when free banking penetratedthe state under
authorityof the National Bank Act. These instancesindicatethat if
the hard-moneyagrarianshad had a conceptionof nationalgovern-
ment less incompatiblewith their social purposes,they might have
temperedratherthan worsenedthe rampantexcessesof nineteenth-
centuryexpansionthat so offendedthem.29
But as it was, they helped an acquisitivedemocracytake over the
conservativesystem of bank credit introducedby Hamilton and by
28 See a contemporary English observer, "Causes and Consequences of the Crisis in the
American Trade," Edinburgh Review, LXV (July i837), 227-28. The impetus given new
banks by the prospect of closing the B.U.S. was observed everywhere. Benton exclaimed
that he had not joined in putting it down in order "to put up a wilderness of local banks."-
24th Congress, 2d Session, Januaryi837, Register of Debates, p. 6io. See also Jabez Hammond,
History of Political Parties in New York (Cooperstown: H. and E. Phinney, i846), II, 434, 489.
29 See Hugh McCulloch,Men and Measuresof Half a Century (New York: Charles Scribner's
Sons, i889); John Ray Cable, The Bank of the State of Missouri (New York: Columbia Uni-
versity Press, I923); Howard H. Preston, History of Banking in Iowa (Iowa City: State Histori-
cal Society of Iowa, I922).

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10 Bray Hammond
the merchantsof Philadelphiaand New York and limber it up to
suit the popularwish to get rich quick. Wringing their hands, they
let bank creditbecomethe convenientkey to wealth-the means of
making capital accessiblein abundanceto millions of go-getting
Americanswho otherwise could not have exploited their natural
resourceswith such whirlwind energy. The excessesof that energy
have forcedthe Jacksonianhard-moneyheroicsto be slowly undone:
the federalgovernment'sauthorityover money, the Treasury'sclose
operatingcontact with the banking system, and the central-bank
controlsover credithave been haltinglyrestored.Credititself, in the
survivingAmericantradition,is not the virus the agrariansheld it
to be but the lifebloodof businessand agriculture,and the Jacksonian
hard-moneyphilosophyhas been completelyforgotten,especiallyby
Jackson'sown politicalposterity.
III
Jacksonhad not committedhimself againstthe bank during the
early part of his first term but worriedboth those who wanted him
to supportrecharterand those who -wanted him to prevent it. In
NovemberI829 he was friendlyto Biddleand assuredhim that he had
no more againstthe B.U.S.than against"all banks."The next month
he slurredthe bank in his messageto Congress.In i831 when the
cabinet was changed, two importantportfolioswent to friends of
Biddle: LivingstonbecameSecretaryof State and McLaneSecretary
of the Treasury.Both wanted the bank continued and hoped to
influenceJackson.Biddledeferredto their hopes,but the tensionwas
evidentlytoo severefor him. The bank'senemieswere growing more
provocative,and in the summerof i83i his brother,a directorof the
bank's St. Louis branch,was killed in a duel, more than usually
shocking,which arosefrom the controversyover recharter.30 What-
ever the reasons,he let impatienceget the upper hand and decided
that the bank,withoutfurthertemporizing,shouldask Congressthat
the charterbe renewed.3
Jacksonwas offended by this direct action, and notwithstanding
improvementsin the new charterand concessionsto his views, he
vetoedthe bill of renewal.The economicreasoningof the veto message
was, in Catterall'slanguage, "beneath contempt,"and the most
30 St. Louis Beacon, September i, i831, September 22, i831; Niles' Weekly Register, Sep-
tember i7, i83I, p. 37. The duel was fought with pistols at five feet, Major Biddle being
nearsighted, and each man killed the other.
3'R. C. H. Catterall, Second Bank, pp. 214 ff.

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Jackson,Biddle, and the United StatesBank 1 1
appealingallegationsin it were "demonstrablyand grossly false."32
Biddle was deluded enough to -have 30,000 copies printed and dis-
tributedin the bank'sown interest.One may regardthis as evidence
of contemptfor Jacksonor of a faith in the democracyas sincereas
Jackson'sown; but it is also evidenceof the limitationson Biddle's
politicalsense.In the electionthat fall the bank was the leadingissue,
and hopesfor recharterwent to nothingwith Jackson'soverwhelming
majority.Jackson'spurposenow was to stop using the bankas govern-
ment depository.How firmly acceptedit was in Washingtonas the
peculiaragency of the governmentis indicatedby the resistancehe
encountered.He had to get rid of two Treasuryheads successively
beforehe found a thirdwho would executehis wishes,the law giving
only the Secretaryof the Treasurythe power to removethe govern-
ment'sdepositsfrom the bank; and he had also to disregarda House
resolutiondeclaringthat the governmentdepositswere safe as they
were.
With loss of the deposits,the bank lost the meansof regulatingthe
privatebanks'extensionof credit.Biddle had made enough mistakes
already,but he now madethe fatalone of failing to resignand let the
bank be liquidated;there is a limit beyond which the head of a
centralbank cannotdecentlygo againstthe head of the government,
even when he is right and the head of the governmentis wrong.
Moreover,althougha centralbank is a veryusefulinstitution,it never
possessesthe kind of virtuesthat count in conflictagainstan intensely
popularleader.By resigning,Biddlewould havestultifiedJacksonand
justifiedhimself,as it turnedout; for when the panic came in i837,
Jacksonwould have got the blame,with considerablejustice.Further-
more,Biddle would have sparedhimself a tragicend. The bank was
in a betterconditionthan it came to be later, and conditionswere
much more favorablefor liquidation,in spite of the recessionof
i833-i834. Incidentally,this recessionwas produced,it was averred,
by a vindictivecurtailmentof the bank'sloans. There certainlywas
resentmentmixed into the bank'spolicy,but on the other hand, the
bank couldnot go out of existence,as its enemiesdesired,withoutcur-
tailingits credit,and curtailmentis alwaysunpopular,scarcelyless in a
periodof generalexpansionthan in one of depression.
Insteadof going out of existencethe bank becamea privatecor-
porationunder Pennsylvaniacharterin Februaryi836, a fortnight
82 Ibid., p. 239.

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12 Bray Hammond
beforeits federalcharterexpired.33
A little more than a yearlater the
panicof I837 broke.It beganMay io and involvedall the banksin the
country, about 8oo in number, with an aggregate circulationof
$i5o,ooo,ooo and deposits of $i25,000,000. It precipitated three distinct
monetaryprograms-one of hardmoneyby the anti-bankadministra-
tion in Washington,one of easymoneyby Biddlein Philadelphia,and
one of convertibilityby the banksof Wall Streetunder the sage but
incongruousleadershipof the venerableJeffersonian,Albert Gallatin.
The administration, with Van Burennow president,took the oppor-
tunity to urge an independent Treasury system, with complete
"divorceof bankand state."Its coursewas that urgedby Jackson,who
wrote,July 9, I837:
Now is the time to separatethe Governmentfrom all banks, receiveand
disbursethe revenuein nothingbut gold and silvercoin,and the circulationof
our coin throughall publicdisbursements will regulatethe currencyforever
hereafter.Keepthe Government free from all embarrassments,whilstit leaves
thecommercial community to tradeuponits owncapital,andthebanksto accom-
modateit with suchexchangeand creditas bestsuitstheirown interests-both
beingmoneymakingconcerns,devoidof patriotism, lookingaloneto theirown
of all others.It has been,and ever will be a curseto the
interests-regardless
Governmentto have any entanglementor interestwith either,more than a
generalsuperintendingcareof all.34
Wall Street paid little attention to this program but set about
preparationsto resumespeciepaymentsas soon as possible,getting its
own housein orderand urging the bankselsewhereto send delegates
to a convention"for the purpose,"in Gallatin'swords, "of agreeing
on a uniform course of measures and on the time when the
resumptionshouldtake place."'5'
Nicholas Biddle took a courseopposedto that of both Wall Street
and the administration.He demandedthat the Treasuryscheme be
abandonedand the specie circular repealed. He contended that
Jackson'spolicieswere responsiblefor the financialdistressand that
the basicconditionof recoverywas theirrepudiationby Congress.Till
these things were done, the banks should not resume redemption
33 The authorized capital of the bank under Pennsylvania charter was $35,ooo,ooo, as it
had been under national charter. It appears, however, that the shares ($7,000,000 par) held by
the government under the national charter were not reissued to new owners and that the
actual paid-in capital of the Pennsylvania corporation was only $28,ooo,ooo.-John J. Knox,.
History of Banking (New York: Bradford, Rhodes, and Company, 1903), pp. 78-79.
34 J. S. Bassett, Correspondence of Jackson, V, 495, 498, 500, 504 Hf.; Condy Raguet,
Financial Register, II (Philadelphia: Adam Waldie, 1838), 58.
35 Albert Gallatin, Writings, III, 398.

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Jackson,Biddle, and the United StatesBank 13
of their notes. Wall Street'sprogram he denouncedas premature
and sacrificial.He advocatedinsteadan activeand flexiblepolicy that
shouldbe remedialfor the prostrateeconomy-that should check the
credit contractionand the fall of prices.His own objectsduring the
past eighteenmonths,he wrote JamesGordonBennett,Octoberi838,
had been"to sustainthe nationalcharacterabroadby payingour debts
and at the same time to protectthe securitiesand the staplesof the
countryfrom the ruinousdepreciationto which they were inevitably
sinking."36It was evident to him, he wrote John Quincy Adams in
December,"thatif resortwas had to rigid curtailments,the abilityto
pay would be proportionallydiminished;. . . . the only true system
was to keepthe countryas much at easeas consistedwith its safety,so
as to enablethe debtorsto collecttheir resourcesfor the dischargeof
their debts."37Lenity for the banks would mean lenity for their
debtors,foreclosuresand bankruptcieswould be avoided,and values
protectedfrom collapse.Suspension,he had alreadysaid,was "wholly
conventionalbetweenthe banksand the community"and arosefrom
"theirmutualconvictionthat it is for their mutualbenefit."38
The situationwas one in which the more conservativesettledback
to let deflation,as it came to be called a centurylater, run its bitter
course; and the hard-moneyagrarianssardonicallyjoined them in
hoping for the worst.But both the agrariansand Wall Streettestified
to the popularityof Biddle'sideas.GovernorFord of Illinoisobserved,
with the sarcasmof a hard-moneyDemocrat,that althoughthe banks
owed more than they could pay and althoughthe people owed each
otherand the banksmorethanthey couldpay,"yetif the whole people
could be persuadedto believe the incrediblefalsehoodthat all were
able to pay, this was 'confidence.'"39 In Wall Streetit was said that
suspensionmade lawbreakersof everyone. "Insteadof the permanent
and uniformstandardof value providedby the Constitution,and by
which all contractswere intendedto be regulated,we have at once
fifty differentand fluctuatingstandards,agreeingonly in one respect,
that of impairingthe sanctityof contracts."40The believersin Biddle
were themselves eloquent in the new faith. Following the later
36 Presidents"Letter Book, No. I, 542, Biddle MSS, Library of Congress.
37 2gth Congress, ist Session, House Document No. 226, p. 405.
38 Condy Raguet, Financial Register, I, 342-46.
39 Thomas Ford, History of Illinois (Chicago: S. C. Griggs and' Company; New York:
Ivison and Phinhey, i854), p. 227-
40Report of delegates to the Bank Convention, New York, November i837; Condy Raguet,
Financial Register, I, 229.

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14 Bray Hammond
debacleof the B.U.S.,the PhiladelphiaGazette said: "The immediate
effectof the suspensionwill be an easein the money market,a cessa-
tion of those caresand disquietudeswith which the businessmen of
our communityhave been annoyed... . The great error. . . . to
which all subsequenterrorsare in a measureto be tracedwas in the
prematureresumptionin August i838... . The banks are just as
good, andbetterand moresolid,undera seasonof suspensionas under
its opposite."41
Meanwhile,the New York bankshad succeededin resumingpay-
ment of their obligations,May io, i838, the anniversaryof the sus-
pension. This was a real hard-moneyachievement,due largely to
Gallatin and the Bank of England, in which the professedlyhard-
money administrationhad little if any part. Insteadit had to violate
with its eyes open the professionsthat Jacksonhad violatedwithout
knowing what he was doing. While still trying to distributea federal
"surplus"which had turnedinto a deficit,it had to resortto issuesof
Treasurynotes,which its hard-moneyzealotsbelievedunconstitutional.
It had to go still furtherand toleratewhat Biddlehad demanded:the
specie circularwas repealedin May i838, the subtreasurybill was
defeatedin June,and in July the Treasuryhad to accept-to its sub-
stantialrelief-a credit of four to five million dollars on the books
of the Bank of the United Statesin anticipatedpaymentof amounts
due the governmentin liquidationof its shares.42 This last transaction
made the bank a depositoryof the governmentsome five yearsafter
Jacksonhad orderedthat its predecessor,a betterinstitution,ceaseto
be used as depository.
By the fall of I838, bankseverywherewere back on a speciebasis,
and, althoughthis was mainly due to the effortsof Wall Streetand
Albert Gallatin,it was Biddle who had the prestige.He was riding
on the crest:"All that it was designedto do has been done,"he wrote
JohnQuincyAdamsin Decemberi838; and he was aboutto retire.43
Two monthslater,FebruaryI839, he was Van Buren'sguest of honor
41 Philadelphia Gazette, October IO, 1839.
42 These represented payment of $7,900,000 to the government for its stock in the bank.
This sum included a premium of about $i,ooo,ooo, besides which the government had
received dividends of over $7,Ooo,ooo during the twenty years of the bank's existence. The
net gain to the government from its original investment of $7,000,000, which it paid for
in bonds, is estimated by Knox at $6,ooo,ooo and by Catterall at $8,ooo,ooo-John J. Knox,
History,of Banking, p. 79; R. C. H. Catterall, Second Bank, p. 474. In the settlement for the
government stock, agreed upon in i837 (Catterall, Second Bank, pp. 373-75), the administration
had held out for a premium in a way which indicated it had no doubt of the bank's solvency.
43 29th Congress, ist Session, House Document No. 226, p. 408.

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Jackson,Biddle, and the United StatesBank 15
at the White House. "This dinner went off very well," according to
James A. Hamilton, "Biddle evidently feeling as the conqueror. He
was facetious and in intimate converse with the President."" A month
later Biddle retired from the bank, its affairs being, he said, in a state
of great prosperity and in able hands.45The same day the directors
were unanimous in describing him as one who had "performed so
much and so faithfully" and was leaving the bank "prosperousin all
its relations . . . . and secure in the respect and esteem of all who
are connected with it in foreign or domestic intercourse."46
Six months later, in the fall of i839, the bank suspended payment
of its obligations. It resumed and then suspended again. In i84i, after
two years of dismayed inquiry and recrimination, it was assigned to
trusteesfor liquidation.
The stockholders were stunned, and then they turned on Biddle.
In the summer of i840 he was told that he owed the bank an "over-
advance"of about $320,000on an old account. This he denied. Never-
theless, "though he did not recognize the claim" and although
"neither law or equity made it necessary to pay," he did so-mostly in
Texas bonds which were accepted at more than market value. The
stockholdersnext turned to litigation and thereafterseem to have kept
Biddle continuously in the courts. In January i842, he and former
associatesin the bank were arrested on charges of criminal conspiracy
and put on $io,ooo bail each. The charge was that they had conspired
"to cheat and defraud the bank by obtaining therefrom large advances
upon shipments of cotton to Europe," and "by the unlawful receipt
and expenditure of large sums of money, the application of which is
not specified upon the books."47The court of General Sessions was
occupied two weeks with habeas corpus hearings, twenty witnesses
being examined and "all the books and papers of the bank brought
into court, whcre they underwent a most searching investigation."
Biddle's attorneys let his case stand on the evidence of the prosecutors.
"As soon as the testimony for the prosecutionwas finished, the counsel
for Mr. Biddle offered to leave the matter to the court without argu-
ment."4 The court found evidence lacking that the acts charged
44 R. C. McGrane, Correspondenceof Biddle, p. 337; Reminiscenses of James A. Hamilton
(Ncw York: Charlcs Scribncr'sSons, i869), p. 312.
45 Niles' Weekly Register, LVI (April 6, i839), p. 84.
46 29th Congrcss, ist Scssion, House Document No. 226, p. 486.
47 29th Congrcss, ist Scssion, House Document No. 226, 419 ff., 475 if.; also opinion of
judge Barton, Philadelphia Inquirer, May IO, x842.
48Philadelphia Public Ledger, April ii, i842.

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Bray Hammond
involvedfraud; for they were known to the directorsand approved
by them.Of any fraudulentcoalitionit found nothing to justifyeven
a reasonablesuspicion.49 Two judges concurredin this decision;one
dissented.
A few weeks later another suit was instituted.The stockholders
filed a bill of equity in which they asked that Biddle and one of his
formerassociatesbe requiredto account for $400,000of the bank's
funds.The bill was dismissedDecemberi844, the court holding that
informationwhich might incriminatethe defendantscould not be
requiredof them.50But Biddlewas no longer living. He had died ten
monthsbefore,February27, i844, aged fifty-eight.

IV
The failure of the B.U.S. leaves two questionsone would like to
have answered:What was the actual conditionof the bank? How
responsiblewas Biddle for it? The Jacksonianshad easy answers,of
course,and jeeredtriumphantly;mattershad provedto be even worse
than they had said, Biddle had known the bank was rotten, and
havingenrichedhimself he had strivento leap clearin time but had
been caught.The Democraticpresswas hot with invectiveand ribald
ridicule of the great Regulator,the old Nick, the prestidigitatorial
wizard who had crowned a careerof astoundingperformancesby
consummatelydestroyingeverythinghe had done, and himself with
it.51
To say with Biddle'spoliticalenemiesthat the bank was "rotten"
is putting it both vigorouslyand vaguely.No one can be precisein
such a matter,for in a long and complicatedliquidationinvolving
suitsand technicaldecisionsrespectingthe admissibilityof claims,the
completenessof the settlementmust be subjectto interpretation.But,
accordingto a trusteequotedby Knox, the creditorswere paid in full,
principaland interest,thoughthe bank'scapitalwas entirelyabsorbed,
and the stockholdersgot nothing.52This would mean a shrinkageof
aboutone fourthof the value of the bank'sassets,roughly speaking.
The 7,ooobankfailuresin the UnitedStatesin the ten years,1921-1930,
entailed estimated losses of about one third of the total deposit
49Philadelphia Public Ledger, April 30, i842. The court had much to say of "the singularly
loose method" by which the directors had conducted the business of the corporation.
50 Bank of the United States v. Biddle, Parsons' Select Cases in Equity (Philadelphia, i888),
II, 33 ff.
51 Democratic Review, III (December i838), 372-73.
52 John J. Knox, History of Banking, p. 79.

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Jackson,Biddle, and the United StatesBank 17
liabilities.5"
The comparisonis crude, but I think it warrantsthe
opinionthat the conditionof the B.U.S. was rotten only in a hyper-
bolicalsense.Moreover,it is to be bornein mind that valuesusually
diminish in liquidation,that the portfolioto be liquidatedwas the
country'slargest,and that the process,which ran to i856, had to be
undertakenin a periodwhen buyerswerenot eagernor pricesbuoyant.
The stockholdersin i841 insisted to the legislaturethat the bank
could pay all its creditorsand requestedlenity so that lossesmight be
minimized.54 These things make me think that the bank in i839 may
have beenin a situationlittle if any worse than that which Joneshad
got its predecessorinto twenty yearsbeforeand from which Cheves
rescuedit.
As for the secondquestion-Biddle'sresponsibility-it seems to me
clearthat policiesput into effect by him led to the bank'sfailurebut
that he had no realizationor suspicionof what was developing.The
policies included prodigalloans on stocks,especiallyto officersand
directorsof the bank, heavy investmentsin corporatestocks and
speculativebonds, and purchasesof cotton and other agricultural
commoditiesfor export.The cotton transactionswere undertakenin
the emergencyof i837 as a meansof sustainingdomesticcommodity
prices and providing Europeanexchange.They succeededinitially,
but once begunthey were hardto stop,and they producedloss, litiga-
tion, and recriminationthat was probablymore damagingto Biddle
himselfthan to the bank.The loan and investmentpolicy was begun
as earlyas i835 when it lookedas if the bankwould have to liquidate:
the activeassetswere convertedinto loanson stocksin preparationfor
a long periodof liquidation.But when the Pennsylvaniacharterwas
obtained,the policywas not abandoned.Insteadit was adaptedto the
vasterprospectsof manifestdestinyand empirebuilding.Loanswere
madewith a lax grandiosity."It seemsto havebeen sufficient," accord-
ing to a stockholders'committeereportlater, "to obtain money on
loan, to pledge the stock of 'an incorporatedcompany',however
remoteits operationsor uncertainits prospects."Partly from choice
and partlyfrom the extortionaterequirementsof its charter-which
Biddle should never have accepted-the bank also became the
owner of such stocks outright; in i840 it had sharesin more than
twenty other banks, some of which it wholly controlled,and great
holdings in railways, toll bridges, turnpikes, and canals, besides
53 Federal Dcposit InsuranccCorporation,Annual Report (Washington, 1940), p. 66.
54 29th Congrcss, ist Scssion, House Document No. 226, p. 533.

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Bray Hammond
speculativebonds issued to finance "publicimprovements."55These
investmentsimmobilizedthe bank'sfundsso thatit was withoutactive
for its stock,to honorits $20,000,000
meansto repaythe government
of circulatingnotes, which soon began to be rapidly presentedfor
redemption,and to meet its charterobligations,which in five years
made it divert more than a third of its capital "to purposesof the
state."To meet these requirements,the bank was driven into the
marketas borrower,both at home and abroad.These borrowingswere
begun by Biddle,and his successorsturnedto them more and more.
Hence the bank came to be progressivelyincurringnew obligations
harderto meet than the old. The pressuremountedswiftly, so that a
situationof apparentcomfortin the springof 1839had passedinto one
of agony in the fall. These were the six months between Biddle's
retirementand the bank'ssuspension.The bank had for years been
growing more and more illiquid, but the condition had remained
concealedby confidence.Once the illiquiditywas suspected,however,
the bank'screditorswoke up with a start,and its obligationsbecame
instantlymenacing.The suddennessof the change dependednot on
existenceof the conditionbut on recognitionof it.
Accordingto one view, Biddle cannot be blamed for the bank's
failure-it happenedsix months after he had retired.Well, granted
that Biddle was gone, the bank was in the hands of successorswho
besidesbeing heirsto his policieshad been trainedin his school.And
this school,accordingto the evidenceof stockholders'reportsand court
records,was one of extremeadministrativeinefficiency.The directors,
dazzled by Biddle, knew nothing and approvedeverything.There
were specialproceduresfor special transactions,items being carried
in the teller'sdrawertill it was expedientto post them. Accountsof
the old bank were continuedon the books of the new as if the cor-
poratecontinuitywas unbroken;and the notes of the old were kept
in circulationby the new-a practicewhich particularlyoutraged
Gallatin.It was in this atmospherethat Biddle'ssuccessorslearnedto
managethe bank, and if they came to grief it cannotbe said that it
55 Laws of Pennsylvania 1835-36, p. 43; 29th Congress,istSession, House Document No. 226,
p. 532. See report of the stockholders' committee, April 3, I84I, 29th Congress, ist Session,
House Document No. 226, esp. pp. 414-i6, 425 If. This report confirms, it seems to me, the
opinion of Judge Barton a year later. I do not go into the cotton transactions, which Judge
Barton discusses at length, because to discuss them adequately takes too much space. They
show' Biddle's audacity, ingenuity, and casuistry, but it is not clear that they cost the bank
much, except indirectly by deteriorationof management. The loan policy, though less irregular,
did the bank more direct damage.

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Jackson,Biddle, and the United StatesBank 19
was merelybecausethey had not his ability.He would have come to
grief himself.56
That Biddlemust bearresponsibilityfor the bank'sconditionis one
thing; but that he had a guilty consciousnessof its conditionis quite
another.Althoughthe traditionof his dishonestyis held both by-the
Jacksonianpartisansand by some scholars,I think it rests on a trite
and stifflymoralisticview of the facts. If he realized how seriously
wrong things were, it was an instanceof objectiveanalysisand cold
self-appraisal uniquein his career.I cannotbelievehim capableof it.
He was eminentlyof a sanguinedisposition,as is emphasizedin the
characterization of him by Catterall,who has given him more atten-
tion than any other historian.Caution and modesty were probably
never among his more conspicuousvirtues,and Jackson'sattack did
not enhancethem.In the yearsi836 to i839, when he was layingdown
a new coursefor the bank,he was at the height of his career,it then
seemed,and flushedwith victory.He had blunderedwhen he forced
the issue of recharterin i832, and Jacksonhad whipped him in the
electionsthat year,in the veto, and in the removalof the depositsin
i833. But by i838 he seemedto have retrievedhis blunderand defeat.
He had found sanctuaryfor the bankin the Pennsylvaniajurisdiction,
where Jacksoncould only gnash his teeth at it. He could point scorn-
fully at the situationcompoundedof the panic of i837, the specie
circular,and distributionof the federalsurplus.By I839 he was the
honoredguest of Van Burenin the White House, and he could boast
that the bank was again a governmentdepository,that the inde-
pendent Treasuryscheme was rejected,and that the specie circular
was repealed.He had triumphedoverthe Jacksonianson the pointshe
caredmost about.He even claimedcreditfor resumption,patronized
Wall Street,and actedas the impresarioof nationalmonetarypolicy.
It was in the fatuousmoodof wishfulthinkingand expansiveimagina-
tion stimulatedby these illusive developmentsthat he administered
the bank after the failure of Jackson'sattempt to annihilatehim.
If Biddle, at the height of his successin the winter of i838-i839,
examinedhis achievementsobjectivelyand concludedthat all he had
done mountedup to either a colossalfraud or a colossalmistake,he
must have been a very remarkablecharacterindeed.Yet that is what
the traditionof his moral guilt requiresone to believe.I find more
56 For some account of the bank's methods, see Sister M. Grace Madeleine, Monetary and
Banking Theories of JacksonianDemocracy (Philadelphia: The Dolphin Press, I943), chaps. iv
and vo The author seems to believe Biddle morally culpable.

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20 Bray Hammond
crediblethe lessdramaticpossibilitythat,beinga man of verysanguine
susceptibilities,
he was simply carriedaway by successand self-con-
fidence,by the grand scale of his activities,and by the daily exercise
of more power,as he put it, than the Presidentof the United States
possessed.I believe he had lost the faculty of recognizinghis own
mistakes.The series of letters he wrote in i84i-prolix, specious,
declamatorycompositionsin which he unconvincinglyinsisted that
the bank had been in sound conditionwhen he left it-seem to me
the patheticeffortsof a man confoundedby other things than guilt:
by surprise,incredulousness, grief, anxiety,and shock.57His friends
were at no less a loss; the most they could say in his favor was to
protestat thosewho had been his sycophantswhile hoping to prosper
but who turned against him with a "maliciousprosecution"when
their commonfortunescollapsed.58
The hostilityof Jacksonto the Bankof the United Stateswas in the
firstinstancea matterof principle,the bank belongingto a monetary
systemand to a theoryof federalpowerswhich he disapproved;but
later he and his followerscould allege also that the bank was rotten
and Biddle dishonest.That allegationwas, in fact, emphasizedmore
than the originalprinciple.But if the bank was not rottenand Biddle
was not dishonest,then what may be called the moral groundsfor
Jackson's action disappearleaving no defense except in charity
to his good intentions.All he did was destroya wisely developed
monetarysystem. The administrationof that system by the B.U.S.
was admirablebut might have been strengthenedand improvedhad
not Jackson'sviews been so radicaland his temperso intransigent.In
particular,had his demoralizingattackneverbeen madeBiddlewould
not have been stimulatedto undertakehis later grandioseand tragic
course.But the blame must be sharedby Biddle. The fury and the
folly of these two ruined an excellent monetarysystem-as good as
any the *countryhas ever possessed-and left a reckless, booming
anarchy.
When the careerof NicholasBiddleis given the studyits importance
deserves,it may appearthat the earlier part of it, when he was a
centralbanker,was somethingless than brilliantand that the later
part, when he was an empire builder, was something worse than
overweening.But, as it is, the evidenceindicatesan inventive,facile,
dynamicperson-vain and not too painfullyhonestunder pressure-
67 29th Congress, ist Session, House Document No. 226, pp. 475-5i6.
58Philadelphia Public Ledger, April i, i842.

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Jackson,Biddle, and the United StatesBank 21

who encountereda bigoted interferencewith his extremely able


managementof an institutionpurposingto restrainthe inflationary
abuseof bankcredit;who naivelytrustedthe rightnessof his position,
contemnedhis adversary,defiedhim, and, aftera smartdefeatwhich
he refusedto acknowledge,achievedan illusory victory;who then,
with overblownconfidencein his own judgment, in the economic
future of the country,and in the alchemicpowers of bank credit,
committedhimselfto empirebuilding;who did things the ingenious
if not the right way; and who reckonedon a fasterand less fluctuant
growth than the countryactuallyhad. In all this he went with the
times.When an oppositionthat was locofocoon one side and laissez
faire on the other overcamehim, he joined the latter and likelier of
the two. Having been stripped of the Hamiltonian garments of
centralcontrol,he gladly put on the gayerones of free enterprise.Yet
Biddlewas attractedmore by the statesmanshipof enterprisethan by
enterpriseitself. As a centralbanker,his policy had been governed
properlyby publicinterestratherthan profit.59As empirebuilderalso,
he led the bankinto affairsof nationalscopeand purpose.60He upheld
the nation'sforeign financialobligations.He intervenedwith both
partieson behalfof Texas,whose governmenthe had financed.6" He
resisted Jackson'smonetary measureswith a determinationmore
patrioticthan discreet.His retirementfrom the bank at the age of
fifty-threemust have been greatlyinfluenced,and very reasonably,by
political ambitions.Only a few weeks before announcingthat he
would retire,he had been advisedby Thomas Cooperthat his can-
didacyfor presidentof the United Stateswas not immediatelyprac-
ticable because of the "prevailingignorance and prejudice about
banks"-the generalsuspensionbeing still a recent matter-and that
"someyearshence"prospectsmight be better.62 The bank'sdifficulties
from i839 on blanked out these prospectswholly. They did more.
Biddle had reboundedfrom the earlier frustrationthat ended his
careeras centralbanker;from the disasterto his later careerhe had
no power to turn. John Quincy Adams had dinner with him en
famille,November22, i840, and talked long with him. "Biddle,"he
59See his criticism of "mere men of business" as administrators of the B.U.S.-R. C.
McGrane, Correspondenceof Biddle, p. 27.
60 It will be recalled that, in his earlier literary days, he prepared a popular edition of the
Lewis and Clark journals.
61 R. C. McGrane, Correspondenceof Biddle, pp. 325, 333, 335; C. H. Van Tyne, Letters of
Daniel Webster (New York: McClure, Phillips and Company, I902), p. 2I3.
62 R. C. McGrane, Correspondenceof Biddle, p. 333. See also earlier correspondencewith
Thomas Cooper regarding the presidency,pp. 272, 277-282, 293, 296, 323.

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22 Bray Hammond
wrote, "broodswith smilingface and stifledgroansover the wreck of
splendidblastedexpectationsand ruined hopes. A fair mind, a bril-
liant genius, a generoustemper, an honest heart, waylaid and led
astrayby prosperity,sufferingthe penaltyof scarcelyvoluntaryerror-
'tis piteousto behold."63He died a little more than three yearslater,
in reducedcircumstances if not insolvent.
Besidesthe Jacksonianview of Biddle and the view that I have
opposed to it, there is another I have already mentioned. Its dis-
tinction is its calm silence about the unhappy events, whether
discreditableor tragic, of Biddle's last years. In R. C. McGrane's
Panicof 1837, the bank'sfailureis alludedto, and Biddle'sconnection
with it is dismissedin a footnote:"It shouldbe noted that Biddlewas
now out of office,and can not be held responsiblefor what the bank
did at this period."In the published correspondenceof Nicholas
Biddle,edited by Mr. McGrane,there is nothing that deals with the
things that made Biddle'slast yearsso miserablyunlike those of his
prime-the bank'sfailure,the loss of money and esteem,the prosecu-
tion of suitsagainsthim. And similarlyin the articleon Biddlein the
Dictionaryof AmericanBiography,no mention is made of his last
years'being clouded by any troublewhatsoever.Such reticenceand
piety contrastgenteelly with the bitternesshe actuallysufferedand
with the judgmentthat he belongedin jail.64
Two things combinedto give Biddle'sfall a supererogatory black-
ness.One was the sheerdramaof the event.The largestcorporationin
the country-one of the largest in the world-had fallen suddenly
from its splendidsuccessinto.sprawlingcollapseat the very feet of
the genius who had only recentlywith grand gesturesrelinquished
its management.It was a denouementthat stimulatedthe imagination
to make worse what was alreadybad enough.The other aggravation
of the story came from politicalmotives. Biddle and the bank had
never been warmedto by the Whigs, and Biddle'sown ties were less
with them than with the Democrats,but the latternaturallysoughtto
make the bank seem Whig.65They had great success;the debacle
63 John Quincy Adams, Memoirs, ed. C. F. Adams
(Philadelphia: J. B. Lippincott and
Company, i876), X, 36i.
64 Reginald C. McGrane, The Panic of 1837; Some Financial Problems of the JacksonianEra
(Chicago: The University of Chicago Press, 1924), p. 205; R. C. McGrane, Correspondenceof
Middle. The Jacksonian opinion of Biddle is reflected in Arthur M. Schlesinger, Jr.'s, Age of
Jckson (Boston: Little, Brown and Company, 1945), which I have not referred to in this
essay because I reviewed it in the May 1946 issue of this JOURNAL.
65It is not clear which party Biddle supposed might make him president. The second Bank
of the United States was both nurtured and destroyed within the Democratic party. Its

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Jackson,Biddle, and the United StatesBank 23

helped to distintegratethe Whigs and strengthenedthe Jacksonians


immeasurably. As a result,partisanviews have dominatedsubsequent
judgments and given Biddle the incidental and thankless role of
darkenedbackgroundto the glories of Andrew Jackson;and his
achievementsin credit policy, especially in the earlier and more
admirablephase when he was a pioneer central banker,have been
forgotten.Nowhere has he been studiedadequatelyin his own right
as a man of significant accomplishments,shortcomings,and mis-
fortunes.Yet, in intellectualcapacity,force of character,public spirit,
and lasting influence,he was comparablewith any of the contem-
porariesof his prime.
The withering that overtookBiddle'sfame did not extend to his
philosophyand example,which turnedout to be triumphant,though
with no acknowledgmentto him. The monetaryviews of Gallatin
and of Jacksonareboth obsolete,but Biddle'shave a sortof pragmatic
orthodoxy.He sought to make monetarypolicy flexible and com-
pensatoryratherthan rigid. His easy-moneydoctrinehad its sourcein
a visionof nationaldevelopmentto which abundantcreditwas essen-
tial.The majorityof his countrymenhaveagreedwith him. They have
dismissedthe man, but they have followed his ideas, especiallyhis
worse ones. They have sharedhis bullishnessand his energy. They
have not liked Jackson'sprimitiveidealsof a simple,agrariansociety,
exceptin their nostalgicmoods.They have not understoodGallatin's
noble aversionfor the fiercespiritof enterprise.They have exploited
the country'sresourceswith abandon,they have plunged into all the
debt they could,they have realizeda fantasticgrowth,and they have
slighted its cost. Gallatin personifiedthe country'sintelligenceand
Jacksonits folklore,but Biddle personifiedits behavior.They closed
their careers in high honor-he closed his in opprobriumand
bewilderment.
Somerset, Chevy Chase, Maryland BRAY HAMMOND

creators and friends included Madison, Monroe, Gallatin, and Crawford; its three presidents,
Jones, Cheves, and Biddle, were party members. Its greatest enemies were likewise pillars of
the party-Jackson himself, Benton, and Taney. Jackson's cabinet was divided. The Whigs
championed the bank less for its own sake than because Jackson'scourse left them no choice,
and they abandoned it with relief as soon as they could. They were not interested in having
bank credit restricted.

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