key term - Second Bank of the US

Definition

The Second Bank of the United States was a federally authorized national bank established in 1816, serving as a successor to the First Bank of the United States. It played a crucial role in stabilizing the American economy after the War of 1812, regulating currency and credit, and providing a central repository for federal funds. Its existence sparked significant political debate, reflecting the growing tensions between different regional interests and economic philosophies in the early 19th century.

5 Must Know Facts For Your Next Test

1. The Second Bank of the United States was established with a 20-year charter and aimed to provide financial stability and improve the nation’s credit system.
2. Its ability to regulate state banks led to tensions between those who supported a strong centralized bank and those who advocated for states' rights.
3. The bank's president, Nicholas Biddle, played a pivotal role in its operations but also became a target of political attacks, particularly from President Andrew Jackson.
4. The controversial practices and policies of the Second Bank contributed to economic difficulties, including land speculation and inflation.
5. Ultimately, President Jackson's opposition resulted in the withdrawal of federal funds from the bank, leading to its closure in 1836 when its charter expired.

Review Questions

• How did the establishment of the Second Bank of the US reflect the political and economic tensions between different regions of the country?
  • The establishment of the Second Bank of the US highlighted deepening political and economic tensions as it became a symbol of centralized authority versus states' rights. Supporters viewed it as essential for stabilizing currency and promoting commerce, particularly in urban areas, while opponents feared it would undermine local banks and promote elitism. This division was particularly evident between industrialized northern states that benefitted from a strong banking system and agrarian southern states wary of centralized financial power.
• Discuss the impact of Andrew Jackson's presidency on the Second Bank of the US and how it shaped public perception of banking institutions.
  • Andrew Jackson's presidency significantly impacted the Second Bank of the US by challenging its legitimacy and authority. He viewed it as an institution that favored wealthy elites over ordinary citizens. His decisive action to withdraw federal funds from the bank intensified public scrutiny and fueled anti-bank sentiment among those who felt that banks were corrupt. This populist stance led to an erosion of trust in banking institutions and shifted financial power away from central banks toward state-chartered banks.
• Evaluate how economic crises like the Panic of 1819 influenced attitudes toward the Second Bank of the US and shaped future banking policies.
  • Economic crises like the Panic of 1819 played a crucial role in shaping attitudes toward the Second Bank of the US by amplifying public discontent with its practices. The bank's role in exacerbating land speculation and subsequent financial instability led many Americans to view it as an agent of economic hardship rather than stability. This shift in perception contributed to growing calls for banking reform and laid groundwork for future debates around central banking, ultimately resulting in more decentralized banking policies after its demise.

Related terms

First Bank of the United States:

The First Bank of the United States was chartered in 1791 and served as the nation's first central bank, helping to stabilize the economy and establish a uniform currency before its charter expired in 1811.

Andrew Jackson:

Andrew Jackson was the seventh President of the United States who famously opposed the Second Bank, leading to its eventual demise due to his belief that it concentrated too much financial power in the hands of a few.

Panic of 1819:

The Panic of 1819 was a significant economic crisis that followed a period of rapid economic growth, leading to widespread bank failures and unemployment, and causing public discontent toward the Second Bank.