The Second Bank of the United States was chartered for many of the same reasons as its predecessor, the First Bank of the United States. The War of 1812 had left a formidable debt. Inflation surged ever upward due to the ever-increasing amount of notes issued by private banks. Specie was jealously hoarded. For these reasons President Madison signed a bill authorizing the 2nd Bank in 1816 with a charter lasting 20 years.


In the late 1820s a titanic clash erupted between President Jackson and bank President Nicholas Biddle. On one side was Andrew Jackson, Old Hickory, and his supporters who claimed the Bank was a threat to the republic due to its economic power. State bankers felt the central bank's influence frustrated their ability to function. Westerners and farmers claimed the bank was a baleful tool of city folks and overseas interests.


On the other side stood Nicholas Biddle, an urbane Philadelphian; before banking he started a literary magazine called the Port Folio. He traveled the world and found the splendor of Greece most compelling (hence Biddle's insistence of a Greek revival structure). Supporters of Biddle's bank outnumbered detractors however. 128,117 people signed memorials to save the bank as opposed to 17,027 who signed memorials opposing the bank. Ultimately Jackson triumphed when he vetoed Congress's 1832 recharter. Jackson considered his 1832 election triumph over pro-bank candidate Henry Clay a mandate of his anti-bank policy. The bank ceased to function in 1836.


Today the bank is home to the extraordinary Portrait Gallery. Inside the barrel-vaulted structure, graceful Ionic columns compliment the portraits of revolutionary heroes and Federal statesman. Those painted represent a Who's Who of the 18th century. There are signers of the Declaration and Constitution in addition to military men and foreign emissaries. many of the works were painted by Charles Willson Peale, the foremost portraitist of his day. Other artists include James Sharples and Thomas Sully. Of considerable interest are the paintings of Patrick Henry, Casimir Pulaski and Robert Morris. Do not omit a tour of the gallery from your journey to Philadelphia.


bulletLocation: 420 Chestnut Street (Between S. 4th and S. 5th) (Map)
bulletBuilt: 1818-1824






The Second Bank of the United States


A bank chartered in 1816, five years after the expiration of the First Bank of the United States. It was founded during the administration of U.S. President James Madison out of desperation to stabilize the currency. The Second Bank of the United States was located in Philadelphia, Pennsylvania, where its building, designed by the architect William Strickland, still stands as part of Independence National Historical Park.


The Bank served as the depository for Federal funds until 1833, when President Andrew Jackson instructed his Secretaries of the Treasury to cease depositing the funds. Two refused to obey, so he fired them, one after the other, until he got one who obeyed: Roger B. Taney, his former Attorney General and the future Supreme Court Chief Justice. This decision was an aspect of Jackson's famous dispute with the Bank's president, Nicholas Biddle. The Bank, always a privately owned institution, lost its Federal charter in 1836. It became defunct in 1841.


This Second bank was patterned after the First Bank of the United States. The legality of the Bank was upheld in the U.S. Supreme Court case McCulloch v. Maryland 17 U.S. 316 (1819) that also declared null and void any state law contrary to a federal law made in pursuance of the Constitution. The Bank's last president was Nicholas Biddle (1786-1844), an upper class well educated man of letters with banking expertise.


Renewal of the Second Bank was vetoed on July 10, 1832 by Andrew Jackson, and it slowly declined until the expiration of its charter in 1836. The bank became a major campaign issue in 1832, with Jackson supported by the Democrats and Biddle supported by Henry Clay, who ran against Jackson. Jackson won, and the national charter was not renewed, but Biddle kept the bank in operation using a state charter. Tensions were high in August 1841 when President John Tyler vetoed a Whig Party bill that called for the re-establishment of the Second Bank of the United States.







The Second Bank of the United States provided a convenient way for the government to handle its affairs. The bank was created after James Madison and Albert Gallatin found the government unable to finance the War of 1812 after the closing of the First Bank of the United States in 1815.


After the war the United States experienced an economic boom, due to the devastation of the Napoleonic Wars. In particular, because of the damage to Europe's agricultural sector, the U.S. agricultural sector underwent an expansion. The Bank aided this boom through its lending, which encouraged speculation in land. This lending allowed almost anyone to borrow money and speculate in land, sometimes doubling or even tripling the prices of land. The land sales for 1819, alone, totaled some 55 million acres (220,000 km²). With such a boom, hardly anyone noticed the widespread fraud occurring at the Bank as well as the economic bubble that had been created.


In the summer of 1818, the national bank managers realized the bank's massive over-extension, and instated a policy of contraction and the calling in of loans. This recalling of loans simultaneously curtailed land sales and slowed the US production boom due to the recovery of Europe. The result was the Panic of 1819 and the situation leading up to McCulloch v. Maryland 17 U.S. 316 (1819).


Maryland adopted a policy to restrict banks, by placing a tax on any bank that was not chartered by the state legislature. This tax was either 2% of all assets or a flat rate of $15,000. That meant that the Baltimore Branch would have to pay this hefty tax. McCulloch filed suit against the state in a county court. The case made its way through the courts, all the way up to the United States Supreme Court, where the tax by the state of Maryland was ultimately struck down. Daniel Webster had successfully argued the case for the bank.



By the early 1830s, President Andrew Jackson had come to thoroughly dislike the Second Bank of the United States because of its fraud and corruption. Jackson then had an investigation done on the Bank which he said established “beyond question that this great and powerful institution had been actively engaged in attempting to influence the elections of the public officers by means of its money.”


Although its charter was bound to run out in 1836, Jackson wanted to "kill" the Second Bank of the United States even earlier. Jackson is considered primarily responsible for its demise, seeing it as an instrument of political corruption and a threat to American liberties. The head of the Second Bank during Jackson's presidency was Nicholas Biddle who decided to seek an extension of the bank's charter four years early, in 1832. Henry Clay helped to steer the bill through Congress. But Jackson vetoed the bill in July.


In his message on the veto of the bank Jackson used language which appeared to resonate mostly with the common man of the country, while attacking the predominantly rich or foreign stockholders of the current bank. For instance, he explained, "It appears that more than a fourth part of the stock is held by foreigners and the residue is held by a few hundred of our own citizens, chiefly of the richest class. For their benefit does this act exclude the whole American people ... It is but justice and good policy, as far as the nature of this case will admit, to confine our favors to our own fellow-citizens."


Jackson's charter extension veto message inspired Biddle to dismiss the message as a "manifesto of anarchy." Senator Daniel Webster of Massachusetts, who was on retainer as the bank's legal counsel and also Director of its Boston branch, suggested such language was a political tool, and the entire message a campaign document for Jackson's approaching re-election in 1832. If so, it was successful. Jackson defeated Clay.


The Second Bank of the United States thrived from the tax revenue that the federal government regularly deposited. Jackson struck at this vital source of funds in 1833 by instructing his Secretary of the Treasury to deposit federal tax revenues in state banks, soon nicknamed "pet banks" because of their loyalty to Jackson's party.


In September, 1833, Secretary of the Treasury Taney transferred the government's Pennsylvania deposits in the Second Bank of the United States to the Bank of Girard in Philadelphia. This was the successor bank to the Bank of Stephen Girard. Stephen Girard had purchased the assets of the First Bank of the United States when its charter was not renewed in 1811. He then named his new bank the Bank of Stephen Girard. He became a major financier of the War of 1812, including most of the war loan of 1813. He was the original organizer and a major shareholder of the Second Bank. He died in 1841.


The Second Bank of the United States soon began to lose money. Nicholas Biddle, desperate to save his bank, called in (demanded payment on) all of his loans and closed the bank to new loans. This angered many of the bank's clients, causing them to pressure Biddle to re-adopt its previous loan policy.


Some anti-Jacksonians converted their outrage into political action. Under guidance from Webster and Clay, in 1834 they formed the Whig party.[5] If the Whigs and anti-Jackson National Republicans could gain enough votes in Congress in the 1836 election to override a second Jackson veto, they could extend the bank's charter. They did not get enough new members to override a veto. Congress did not send another bank charter extension bill to Jackson.


The Second Bank of the United States was left with little money and, in 1836, its charter expired and it turned into an ordinary bank in Philadelphia. Five years later, the former Second Bank of the United States went bankrupt.






Despite the demise of the Second Bank of the United States, the building that housed it was not demolished. Since the Bank's closing in 1841, the edifice has performed a variety of functions. As of 2006, it is included as one of the main structures in Independence National Park in downtown Philadelphia, alongside many other important early American structures such as Independence Hall and the Philadelphia Merchants' Exchange. The structure is open daily free of charge and serves as an art gallery, housing a large and famous collection of portraits of prominent early Americans painted by Charles Willson Peale and many others.