In the midst of the tariff crisis, Jackson faced a major challenge from politicians who supported the Second Bank of the United States. Founded in Philadelphia in 1816, the bank was privately managed and operated under a twenty-year charter from the federal government, which owned 20 percent of its stock. The bank’s most important role was to stabilize the nation’s money supply, which consisted primarily of notes and bills of credit — in effect, paper money — issued by state-chartered banks. Those banks promised to redeem the notes on demand with “hard” money (or “specie”) — that is, gold or silver coins minted by the U.S. or foreign governments — but there were few coins in circulation. By collecting those notes and regularly demanding specie, the Second Bank kept the state banks from issuing too much paper money and depreciating its value.

This cautious monetary policy pleased creditors — the bankers and entrepreneurs in Boston, New York, and Philadelphia, whose capital investments were underwriting economic development. However, expansion-minded bankers, including friends of Jackson’s in Nashville, demanded an end to central oversight. Moreover, many ordinary Americans worried that the Second Bank would force weak banks to close, leaving them holding worthless paper notes. Many politicians resented the arrogance of the bank’s president, Nicholas Biddle. “As to mere power,” Biddle boasted, “I have been for years in the daily exercise of more personal authority than any President habitually enjoys.”

Jackson’s Bank Veto Although the Second Bank had many enemies, a political miscalculation by its friends brought its downfall. In 1832, Henry Clay and Daniel Webster persuaded Biddle to seek an early extension of the bank’s charter (which still had four years to run). They had the votes in Congress to enact the required legislation and hoped to lure Jackson into a veto that would split the Democrats just before the 1832 elections.

Jackson turned the tables on Clay and Webster. He vetoed the rechartering bill with a masterful message that blended constitutional arguments with class rhetoric and patriotic fervor. Adopting the position taken by Thomas Jefferson in 1793, Jackson declared that Congress had no constitutional authority to charter a national bank. He condemned the bank as “subversive of the rights of the States,” “dangerous to the liberties of the people,” and a privileged monopoly that promoted “the advancement of the few at the expense of … farmers, mechanics, and laborers.” Finally, the president noted that British aristocrats owned much of the bank’s stock. Such a powerful institution should be “purely American,” Jackson declared with patriotic zeal.

Jackson’s attack on the bank carried him to victory in 1832. Old Hickory and Martin Van Buren, his new running mate, overwhelmed Henry Clay, who headed the National Republican ticket, by 219 to 49 electoral votes. Jackson’s most fervent supporters were eastern workers and western farmers, who blamed the Second Bank for high urban prices and stagnant farm income. “All the flourishing cities of the West are mortgaged to this money power,” charged Senator Thomas Hart Benton, a Jacksonian from Missouri. Still, many of Jackson’s supporters had prospered during a decade of strong economic growth. Thousands of middle-class Americans — lawyers, clerks, shopkeepers, and artisans — had used the opportunity to rise in the world and cheered Jackson’s attack on privileged corporations.

The Bank Destroyed Early in 1833, Jackson met their wishes by appointing Roger B. Taney, a strong opponent of corporate privilege, as head of the Treasury Department. Taney promptly transferred the federal government’s gold and silver from the Second Bank to various state banks, which critics labeled Jackson’s “pet banks.” To justify this abrupt (and probably illegal) transfer, Jackson declared that his reelection represented “the decision of the people against the bank” and gave him a mandate to destroy it. This sweeping claim of presidential power was new and radical. Never before had a president claimed that victory at the polls allowed him to pursue a controversial policy or to act independently of Congress (American Voices).

The “bank war” escalated into an all-out political battle. In March 1834, Jackson’s opponents in the Senate passed a resolution composed by Henry Clay that censured the president and warned of executive tyranny: “We are in the midst of a revolution, hitherto bloodless, but rapidly descending towards a total change of the pure republican character of the Government, and the concentration of all power in the hands of one man.” Clay’s charges and Congress’s censure did not deter Jackson. “The Bank is trying to kill me but I will kill it,” he vowed to Van Buren. And so he did. When the Second Bank’s national charter expired in 1836, Jackson prevented its renewal.

Jackson had destroyed both national banking — the handiwork of Alexander Hamilton — and the American System of protective tariffs and public works created by Henry Clay and John Quincy Adams. The result was a profound check on economic activism and innovative policymaking by the national government. “All is gone,” observed a Washington newspaper correspondent. “All is gone, which the General Government was instituted to create and preserve.”