Biddle, born in Philadelphia in 1786, was everything that President Andrew Jackson considered dangerous—a graduate of Princeton, editor of a literary journal and of several volumes of the journals of the Lewis and Clark expedition, and, as a young man, a secretary to the U.S diplomatic mission to czarist Russia.
All of Biddle’s experiences, especially exposure to the economic chaos of early-nineteenth-century Russia, and the vast infrastructure demanded by the opening of the American West, led him to believe that the United States needed the strength of a central bank.
Biddle, who had been on the board of directors since 1819, took control of the bank in 1823. From its chartering in 1816, the Second Bank was mired in controversy, sparking the Supreme Court case McCulloch vs. Maryland, in which Congress was shown to have the legal power to charter the institution. The economic panic of 1819, while not caused by the establishment of the bank, was largely blamed on the bank by unhappy small farmers, westerners, and supporters of state banks.
Biddle believed that the bank’s director should be apolitical, but when opposition to his institution surged he sought allies in Congress, including Daniel Webster and Henry Clay. Biddle and his supporters agreed that the nation needed ready access to funds capable of supporting large-scale military actions, like that waged in the War of 1812, and favored strict regulation of state banks.
Knowing that 1832 was a critical election year, Biddle asked Andrew Jackson to renew the bank’s charter, although it would not expire until 1836. Bank supporters counted on election campaigning to force Jackson into signing, so that he would not lose support in states that benefited from the bank, such as Pennsylvania, where the bank had its headquarters. Instead of seeing this as an economic opportunity for the nation, Jackson interpreted the request as a threat from the bank against presidential power.
As a champion of the “people,” Jackson leapt at the chance to attack an unpopular institution that many small farmers and frontier people thought limited their economic opportunities and was thought to be dominated by eastern, elitist conspirators who sought to profit for themselves. After Congress passed a bill that would recharter the Second Bank of the United States, Jackson vetoed it, citing a vast conspiracy of old-money interests acting against the common voters of the nation.
When Jackson won reelection, Biddle and his followers were unable to summon enough votes to override the veto, and launched into a plan to force the government to recognize the value of the bank. Biddle instructed the bank’s branches not to curtail making loans, an action that caused an economic slump in 1834.
Jackson hit back by ordering his acting secretary of the treasury, Roger Taney, to withdraw federal deposits from the bank and place them in state “pet” banks. Two previous secretaries had refused this order, and Jackson dismissed and replaced them, finally finding an obedient servant in Taney.
Biddle mustered congressional support for a censure of the president on the ground that he was obliged by the bank’s charter to deposit federal funds, and the Senate refused to confirm Taney as the official secretary of the treasury. The charter ran out in 1836, shutting down national bank operation (it continued its existence as the State Bank of Pennsylvania), and Biddle retired in defeat to his estate, Andalusia, where he channeled his interests into breeding race horses, Guernsey cattle, and grapes.
Biddle lost the “Bank War” to Andrew Jackson, and his own network of support could not match the power of the executive branch of the government, especially when Jackson campaigned by accusing the wealthy and educated Biddle of subverting the financial infrastructure of the government against the common man. However, Biddle took no pleasure in the subsequent economic crisis, the panic of 1837, created by uncontrolled paper money issued by the state banks, and he died in 1844, still championing the cause of a centralized monetary system.