Throughout the history of the United States, the fear of governmental corruption and the abuse of power associated with government have been discussed and debated. One of the largest battles among fear, government, and business was the possible rechartering of the Second Bank of the United States. Andrew Jackson believed in democracy and the people, as well as the idea of equality for all regardless of social standings. He had many supporters in Congress including Georgia Representative Augustin S. Clayton. Together, they pushed the Anti-Bank campaign through Congress and the rest of the nation.
The Second Bank of the United States was chartered in 1816 and was the only bank chartered by the national government. The bank was part of the federal treasury. It held one-fifth of the government’s thirty-five million dollar stock capital.1 It was responsible for a large volume of transactions that covered the nation. The Bank was established during a time when state-chartered banks were the premier way of banking. Unfortunately, the state banks each issued its own currency, causing confusion and chaos nationwide. The National Bank was started with the goal of establishing a nationwide currency to replace the many different issues of the state banks. It was supposed to facilitate the connection of public revenue, and it was supposed to enable the government to borrow money. The Second Bank issued its own notes and quickly returned the notes of state banks, which it received in payment of government obligations, as well as any other obligations to the issuing banks for redemption in gold or silver.2 Jackson was a strong supporter of gold and silver, favoring it over paper money. He felt the constitution also supported this view, and he proposed that government should prohibit the use of paper money as payment for land and other services. By doing this he felt the American public would follow his view on paper money, but it did not work; paper money was too popular among the nation.3
Jackson and his supporters believed the Second Bank was a corrupt institution. He felt the Bank aided in the fraudulent and sometimes scandalous actions of American politicians and elites. Robert Remini suggested: Scarcely is there a large city, or indeed a small one where there is a Bank–that has not had cause to bewail the aberration from recititude of some man of (before) unsuspected honesty...Much of the fraud involved banks in all the states but especially among the branches of the Bank of the United States...Those who disbursed funds or otherwise handled public money skimmed off a little something for themselves as a regular matter. According to Remini, Jacksonians believed the Bank housed corrupt and powerful individuals, and anyone involved in the Bank was assumed to be one of those individuals. Not only were the Bankers themselves untruthful, so were the Congressmen regarding the Bank and its money. Usually, the Congressmen were the worst offenders in terms of pocketing money for themselves. 4
Augustin Clayton fully supported Jackson and his view of the Bank as a monopoly. Born in Fredricksburg, Virginia on November 27, 1783, Clayton and his family moved to Augusta when he was young. He later attended the University of Georgia, and he was a graduate of the first graduating class in 1804. In 1831, Clayton was sent to Congress in a special election. He took his seat in the House of Representatives on January 21, 1832, and he served until March 3, 1835. He joined the Jacksonians in 1832 to block the recharter of the Second Bank. Like Jackson, he attacked the Second Bank on constitutional grounds. Clayton also believed corruption surrounded government officials as they were awarded special privileges. According to Clayton, the government lacked the power to deposit its funds in the Second Bank or any of the state banks. He believed in the separation of the government and all banks, and for him, this was the only constitutional action.5
In 1831, the Bank of the United States and its charter were at the center of Jackson’s reform program. Louis McLane was considered efficient and loyal, making him the perfect person to persuade Jackson on the importance of the Bank. Remini said: Martin Van Buren had Louis McLane in mind–and he actually named him in the letter. As a former Federalist, McLane entertained Hamiltonian ideas about some issues, especially the Bank, but otherwise could be expected to perform loyally and efficiently...In some ways McLane was the best of the lot.6 He was a former chairman on the Ways and Means Committee in Congress, and he knew a great deal about finance. He was able to win the support of many head strong politicians, but he did not realize just how powerful in strength and independence Andrew Jackson was. Although, Jackson liked McLane because he would present his opinions in a fair and honest way.7
Knowing how opposed Jackson was to the Bank, McLane began to persuade him to support it in the early fall of 1831. He told Jackson the national debt would be payed off by the end of his first term. The sale of government stock from the Bank of the United States would make this goal possible. Plus, the Bank’s charter would be altered by the liquidation of the stock. Jackson fully supported and liked this idea. McLane then told Jackson that once the national debt was payed off, the additional revenue could go to military defense, arming the state militias, building armories, and improving the army and navy. Obviously, being a former general, Jackson loved this idea. Remini wrote: Increased revenue also meant that the tariff could be adjusted to a more equitable level. Furthermore, McLane proposed to sell all the public lands held by the government to the states in which they lay and then distribute the proceeds from the sale to all the states. Talk about reform and reducing the operation of government! McLane’s proposal staggered the old man in its scope and audacity. Jackson and McLane realized that McLane had developed the type of banking program that Jackson had always imagined. McLane asked Jackson to not tell anyone about the Bank and its possible recharterment until after McLane had reported the recommendations for the recharter to the Ways and Means Committee.8
Jackson’s annual message was completed, and the President met with his cabinet to deliver it. Before this message, McLane spoke with Nicholas Biddle, the president of the Bank of the United States. He told him that he had succeeded in persuading Jackson to support the Bank. In Jackson’s office, his cabinet surrounded him, and he spoke of the Indian policy, the national debt, and he mentioned the Bank. 9 He said he would leave it up to Congress, which made many of his cabinet members confused. Jackson told them he had been neutral in his message about the Bank. After hearing fellow supporters calling Jackson a friend of the Bank, he decided to make it very clear he was opposed to the rechartering of the Bank. 10 Early in the year 1832, Biddle decided to go for the recharter of the Bank. Biddle proceeded with the recharter of the Bank despite warnings from other pro-Bank senators and representatives. They knew Jackson would surely veto the charter if he felt he was being backed into a corner. Biddle did not listen to he colleagues and continued pushing for the recharter of the Bank.11
Like Jackson, Clayton’s goal was to eliminate the Second Bank. Clayton had written and published a pamplet against the Bank that was released in Georgia. He attempted to introduce a resolution in the House of Representatives over the Bank. He called for an investigation into the misconduct of the Bank of the United States and alleged violations of its charter. Clayton and his supporters knew that if anyone opposed this idea, they were guilty knowing about the Bank’s misconduct. The motion passed, and Clayton was asked to be the chairman of a committee that would go to Pennsylvania and inspect the Bank. The committee did an excellent job in discovering the deceit that the Bank had been issuing. 12 He believed by having no national bank, state banks would work together, but he still thought state banks were corrupt. He also believed the Bank was a corporation and stated that Congress did not have the power to create corporations.13
Clayton would join with Jackson in the effort to destroy the Second Bank of the United States. In a long speech, Clayton addressed the reasons the Bank was unconstitutional. He said there was presented to consideration of Congress six distinct cases of supposed breaches of charter. He stated: The charge preferred against the Bank of the United States of ‘its having violated its charter,’ has been clearly substantiated in the following instances: ‘1st In relation to usury. 2nd In relation to the issuing of branch orders, as a circulation. 3rd The selling of coin, and particularly American coin. 4th Making donations for roads and canals, and other objects. 5th Building houses to rent or sell, and erecting other structures in aid of that object.’ It would, therefore, seem to your committee to be most judicious not to act upon the question of rechartering that institution, or of chartering any other national bank. Clayton was against the bank strictly because he thought it was unconstitutional. He felt it abused its power and created its own rules. He said, “the Bank had some deceitful purpose in view–some design of fraudulent nature was intended.” 14 Clayton was proud of his views, and he wanted to share his self-respect with the American people. He felt he had succeeded in portraying just how “evil” the Bank was. 15
When the question of recharterment presented itself to Jackson, he knew just what to do. He used his power of veto when Biddle and Henry Clay attempted to pass the renewal of the Bank’s charter. Clay, hoping for a political victory against Jackson, decided to make the charter of the bank an issue in the upcoming election of 1832. Jackson vetoed the bill and manage to get re-elected. He said: A bank of the United States is in many respects convenient for the Government and use to the people. Entertaining the opinion, and deeply impressed with the belief that some of the powers and privileges possessed by the existing bank are unauthorized by the Constitution, subversive of the rights of the States, and dangerous to the liberties of the people...I sincerely regret that in the act before me I can perceive none of those modifications of the bank charter which are necessary, in my opinion, to make it compatible with justice, with sound policy, or with the Constitution of our country. 16 Jackson cited constitutional arguments against the charter, and believed the Bank was monopoly over foreign and domestic exchange. For Jackson and his supporters, the Bank was “a symbol for Anti-Americanism.” Clay and Biddle thought the veto made Jackson look “reckless and irresponsible.” By vetoing the bill, Jackson felt he was protecting the common people of America from the corrupt money of the Bank.17
The war against the Bank was just beginning. The Bank’s actual charter did not expire until 1836, leaving four years for Clay and his supporters to compose a new bill renewing the Bank’s charter. To prevent this from happening, Jackson ordered all of the federal government’s deposits to be removed from the Second Bank and assigned these deposits to the state banks of his choice. The government was the Bank’s largest depositor, and according to the charter, the only way to move the deposits was if the secretary of the treasury gave the permission to do so. The secretary, McLane refused the idea of deposit removal because he would have to give a report to Congress explaining why the deposits were removed. McLane moved to the State Department, so Jackson, in his mind, was free to remove the deposits.18
Jackson believed if the deposits were removed, the Bank would lose the ability to corrupt Congress, and his veto would remain safe. The new secretary was William Duane, and he also opposed the rechartering of the Bank, but he opposed the removal of the deposits. Duane refused to comply with Jackson’s plan, so Jackson fired him. The new secretary complied with Jackson’s orders, and all the Bank’s revenue was dispersed throughout the country in regional banks, also known as “pet banks.” To many people, both critics and supporter, this action was beyond the President’s power. 19
After hearing of Jackson’s bold decision, Clayton began to reevaluate the banking situation. He voted with the Bank of the United States regarding continuing the debate on its existence because he believed the deposits should stay there, and not go to the state banks. This action by Clayton received criticism as well. One critic wrote: Mr. Clayton votes that the Bank ought not to be rechartered, and yet advocate the restoration of the public deposits to that Bank. If, as these gentlemen contend, the removal of the deposits has caused all the distress, and if they oppose the recharter of the Bank, why do they vote to restore them, when in two years they must be removed again?...Do they hope that if the Bank triumphs now, a change will take place in public opinion in its favor?...The free citizens of Georgia will not change. The citizens of Georgia had heard Clayton condemn the Bank as being corrupt and unconstitutional, causing them to support this claim and idea that further investigation into the Bank was not needed. After the Anti-Bank campaign, he broke with the Democrats. When Clayton voted against the removal of the deposits, it left Georgians confused and looking for answers. Some Georgians questioned, “He believed last year that the Bank was an unsafe depository for the public money–now he is in favor of returning it into these same unsafe hands, without giving his constituents any good reason why he is so.” 20
As critics began to associate Clayton with Jackson, Clayton was quick to clear his name. He insisted that the Federal government lacked the power to deposit its funds in either the Bank of the United States of state banks. The only constitutional course was the complete separation of the United States from all banks. In a speech delivered to the House of Representatives concerning Jackson and the removal of the deposits, Clayton said: The President himself, has changed his opinions on this point; at the last session he suggested to Congress that the deposits were unsafe, and yet when he removed them, he abandoned the idea altogether, and said the Bank was too strong...This is the shape of the argument; the President says to me, I removed the deposits in October last, believing them to be perfectly safe a year ago, therefore, you ought not rely on my judgement, but vote against their restoration.21 Clayton was determined to clear his name by placing all the blame on Jackson. He tried to portray Jackson as a man who always has to have power and the upper-hand. Clayton did not agree with the removal of the deposits. He saw no need in this action.
Clayton continued to clear his name of the removal of the deposits. He wanted people to know he did not support the Bank because he thought it was unconstitutional. He stated: It was never my intention to injure the present bank, or to destroy its existing rights merely for those objects...My whole purpose was to prevent its re-establishment upon principle, and under the firm conviction that it was not authorized by the constitution. He contradicted what he stated earlier about his six distinct cases of the supposed breaches of charter. He listed several reasons for the Bank to be closed, not just constitutional reasons. He had believed Congress was to be incharge of public money, but now believed Jackson had control. In a last attempt to clear his name, Clayton said, “Jackson believed that if robbed of the deposits, he verily believed the bank had no power to do mischief.” Clayton put the removal of the deposits into Jackson’s reform, not his own. 22
The decision to not recharter the Second Bank of the United States was a mistake. The Bank itself was not corrupt; it was the group of individuals who ran the Bank that led to corruption. The Bank could have done everything Jackson wanted, but he had to replace the men first. Protests concerning the removal of the deposits continued. Clayton served until March 3, 1835. He returned to Georgia where he died of a paralytic stroke in 1839.23 He always felt the Bank was unconstitutional. Jackson’s feud with the bank continued, and it surrounded his entire second term.
1. Bernard A. Weisberger, “The Bank War,” American Heritage 48 (1997): 10.
2. Peter Temin, “The Economic Consequences of the Bank War,” Journal of Political Economy 76 (1968): 258.
3. Harry L. Watson, Andrew Jackson vs. Henry Clay: Democracy and Development in Antebellum America (New York: Bedford / St. Martin’s, 1998), 180.
4. Robert V. Remini, Andrew Jackson and the Course of American Freedom, 1822-1832 (New York: Harper & Row, 1981), 16.
5. John O. Eidson, “Editorial,” GA Review 9 (1955): 247
6. Remini, 335.
7. Remini, 336-337.
8. Remini, 337.
9. Remini, 338.
10. Remini, 340.
11. Remini, 343.
12. Remini, 362.
13. House of Representatives, Review of the Report of the Committee of Ways and Means, to Whom Was Referred So Much of the Message of the President, as Relates to the Bank of the United States, April 13, 1830.
14. House of Representatives, Speech of Mr. Clayton, of Georgia, The Bank of the United States, March 2, 1832.
15. House of Representatives, Speech of the Honorary A.S. Clayton, The Expediency of Reporting a Bill to Deposite the Public Moneys in the State Banks, March 11, 1834.
16. Watson, 180-181.
17. Watson, 83.
18. Watson, 93.
19. Watson, 93-94.
20. “The Question Settled,” Southern Banner, 23 March 1833 - 17 March 1836, page 2.
21. House of Representatives, Speech of the Honorary A.S. Clayton, The Expediency of Reporting a Bill to Deposite the Public Moneys in the State Banks, March 11, 1834.
22. House of Representatives, Speech of the Honorary A.S. Clayton, The Expediency of Reporting a Bill to Deposite the Public Moneys in the State Banks, March 11, 1834.
23. Eidson, 247.