key term - Second Bank of the United States

Definition

The Second Bank of the United States was a federally chartered bank established in 1816 to serve as the nation's central financial institution. It was created to stabilize the economy after the War of 1812, control inflation, and provide credit to the government and private businesses. This institution played a crucial role in the economic landscape during the presidency of Andrew Jackson, who saw it as a symbol of elite power and corruption, ultimately leading to his fierce opposition and the bank's eventual demise.

5 Must Know Facts For Your Next Test

1. The Second Bank was established with a 20-year charter, following its predecessor's closure due to mismanagement and public discontent.
2. It had significant influence over state banks by regulating currency and credit, but it faced considerable opposition from those who viewed it as a threat to democracy.
3. Andrew Jackson famously waged a campaign against the Second Bank, arguing that it benefited a small elite at the expense of the common people.
4. In 1832, Jackson vetoed the recharter of the Second Bank, which he deemed unconstitutional and harmful to American citizens.
5. The dismantling of the Second Bank led to increased financial instability, contributing to economic issues such as inflation and speculative land bubbles in subsequent years.

Review Questions

• How did Andrew Jackson's views on the Second Bank reflect his broader beliefs about democracy and governance?
  • Andrew Jackson believed that the Second Bank represented an undemocratic concentration of power that favored wealthy elites over average citizens. His opposition stemmed from his commitment to populist ideals, which prioritized the needs and voices of everyday Americans. By campaigning against the bank, Jackson aimed to dismantle what he perceived as an institution that undermined true democracy and economic fairness.
• Evaluate the impact of the closure of the Second Bank on the American economy in the years following its demise.
  • The closure of the Second Bank resulted in significant economic turmoil, as it had previously regulated currency and credit across various state banks. Without this central authority, many state banks issued their own notes without adequate backing, leading to rampant inflation and a series of financial panics. The instability created by these conditions contributed to economic uncertainty and set the stage for future financial crises, illustrating how crucial central banking is for economic stability.
• Assess how the conflict over the Second Bank exemplified broader societal tensions in early 19th century America regarding class and economic power.
  • The conflict over the Second Bank highlighted deep-seated tensions between different social classes in early 19th century America. Supporters of the bank argued it was essential for national economic growth and stability, while opponents, led by Andrew Jackson, framed it as a corrupt institution that perpetuated inequality. This struggle encapsulated broader debates about who should hold economic power—wealthy elites or ordinary citizens—reflecting emerging populist sentiments that shaped American political discourse during this era.

Related terms

Andrew Jackson:

The seventh president of the United States who opposed the Second Bank and believed it favored wealthy elites over ordinary citizens.

Pet Banks: State banks selected by the U.S. Department of Treasury to receive deposits from the federal government after the closure of the Second Bank.

Bank War:

A political struggle in the early 1830s between President Andrew Jackson and supporters of the Second Bank, which ultimately led to the bank's charter not being renewed.