Andrew Jackson’s Bank War and America’s Long Quest to Reconcile Corporate Money with Democratic Elections
A COMMON refrain among astute observers holds that the United States has in recent decades descended into a “New Gilded Age” that explicitly recalls the income inequality, class conflict, monopolization, and corporate malfeasance of the late-19th century epoch dominated by unscrupulous robber barons. Yet, as this article shows, fears of corporate money corrupting democratic elections predate the Civil War and may even go back to the country’s founding.
President Andrew Jackson’s political conflict with the Second Bank of the United States (BUS)—the “Bank War”—was a case in point. In an issue that both defined his presidency and contributed to the development of mass political parties, Jackson drew up a grocery list of objections to the BUS akin to Jefferson’s world-famous tirade against King George III.
According to Jackson and his followers, the Jacksonians (later, Democrats), the Bank was an unconstitutional state-sanctioned monopoly that violated states’ rights, widened class divisions, undermined equal opportunity, stimulated sectionalism, rewarded foreign stockholders, and privileged rapacious speculators and creditors at the expense of hard-working farmers and artisans. One of the most common indictments of the “Monster Bank” was that it could wield its formidable financial resources to interfere in the electoral process by bribing members of the press and Congress.
Even historians inclined toward a charitable treatment of the BUS and its stewardship under the Philadelphia patrician, Nicholas Biddle, recognize that Jackson’s fears on this point had at least some basis in reality. But how much money did the Bank spend in its ultimately futile attempt to prolong its existence and avoid the wrath of Andrew Jackson?
My book, The Bank War and the Partisan Press: Newspapers, Financial Institutions, and the Post Office in Jacksonian America, recently published by the University Press of Kansas, offers an updated and more detailed response to this question while characterizing Biddle’s efforts as one of the earliest interregional corporate lobbies in the nation’s history. Evidence from numerous manuscript collections, bank balance sheets, newspaper editorials, minutes of BUS board meetings, internal memoranda between bank officers, and records of legislative debates, sheds light on the ways in which the Second Bank propagated a positive message through space and time.
BIDDLE’S CAMPAIGN achieved a nationwide presence primarily because he deployed large sums of cash; because he mobilized an impressive array of branch officers, state bankers, lawmakers, intellectuals, voter counters, and confidential agents; because he communicated a relatively uniform message to disparate geographic locations; and because advancements in transportation and communication, in combination with the peculiar institutional structure of the Bank in the form of branch offices, enabled one man to reach scores of correspondents separated by hundreds of miles of distance.
In response to Jackson’s first public criticism of the Bank during his annual message to Congress in December 1829, Biddle authored an anonymous piece defending the Bank’s currency. A Senate Finance Committee report issued the following March replicated Biddle’s language in stating that the Bank provided “a currency as safe as silver; more convenient, and more valuable than silver, which…is eagerly sought in exchange for silver.” The House Ways and Means Committee followed suit a few weeks later. To ensure that these reports reached a wider audience, Biddle asked the Bank’s board of directors to appropriate some of the institution’s funds for printing and dissemination. The board, which was comprised of Biddle and like-minded colleagues, agreed.
In addition, the board approved funds for printing and distributing articles and pamphlets written by former treasury secretary Albert Gallatin and George Tucker, a professor of political economy at the University of Virginia. Using the Bank’s funds for self-promotion was risky because it threatened to confirm Jacksonians’ worst fears and cause political blowback. Yet because Bank defenders believed that Jacksonians manipulated public opinion through gross exaggerations and demagogic rhetoric, they were willing to take the risk.
The Bank’s business model, according to a little-known internal report circulated among the Bank’s stockholders and directors, “derive[d] much of its advantages from its credit, and its general reputation for solvency.” Too many unanswered attacks in partisan newspapers might erode borrowers’ trust in that reputation, triggering a devastating bank run.
In the early months of 1831, the contours of an interregional corporate lobby began to take shape. Biddle dispatched confidential agents with bank funds to state legislatures in Pennsylvania and New York in order to procure pro-BUS resolutions. One of Biddle’s agents, Jacksonian newspaper editor John Norvell, wrote in March that he was “very hospitable” to a number of legislators in Harrisburg, inviting them to dine at his place, “lending five, ten, and twenty dollars to them,” which he never expected to get back.
Norvell told Biddle, “your hundred dollars are pretty well exhausted,” and worried that their secret arrangement would invite scrutiny. The editor closed with a stern plea: “For Heaven’s Sake, throw this letter into the fire as soon as you have read it. It contains some things not to be disclosed to the world.”
THE CORE of Biddle’s lobby was the financial assistance he extended to partisan newspaper editors for circulating Bank reports, internal documents, letters, balance sheets, and editorials. Duff Green of the United States Telegraph, James Watson Webb of the New York Courier and Enquirer, and Thomas Ritchie of the Richmond Enquirer were some of the most high-profile editors that received substantial loans from the Bank. The National Intelligencer, edited by Joseph Gales, Jr. and William Seaton, was Biddle’s preferred medium.
Such loans became the subject of acrimonious congressional hearings in the spring of 1832 that threatened to derail the Bank’s hope of a new charter. A special select House committee headed by the anti-BUS Representative Augustin Clayton of Georgia pummeled Biddle’s relationship with the press in a report issued in April 1832, claiming that the bank had abused its powers because it issued loans of unusually long duration to editors without adequate security.
A $15,000 loan to Webb, in particular, exposed Biddle to charges of bribery, especially because the latter had taken this sum out of his own personal funds without recording the transaction in the bank’s account books. Nor had Biddle presented Webb’s loan application before the bank’s board as required. Although Biddle retained support among a majority of representatives and senators in Congress, at least one of Biddle’s colleagues and closest allies, BUS director Thomas Cadwalader, disapproved of the unilateral and secretive manner in which Biddle propped up editors.
When Cadwalader left Philadelphia on business in early 1832, Biddle single-handedly expedited loans to some of his preferred editors, including “an accommodation to Gales and Seaton, of several years standing.” Cadwalader contemplated resignation. While he recognized that Biddle’s behavior stemmed from his “zeal for the interests of the Bank,” he emphasized to the BUS president in no uncertain terms, “do me the justice to acquit me of all knowledge of, or participation in [these] transactions.”
HISTORIANS HAVE yet to systematically calculate Biddle’s spending and loans from January 1830 to July 1832, the period in which he was lobbying most intensely. When writing about the presidential election in the fall of 1832, famed Jackson biographer Robert V. Remini stated, “Although it can not be determined precisely…it is likely that something approximating $100,000 was spent by the institution to defeat Andrew Jackson.”
The unapologetically pro-Biddle historian, Thomas Payne Govan, wrote, “During 1831 and 1832 the Bank had spent a total of eighty thousand dollars for the preparation, printing, and circulation of documents.” Though Govan was generally detailed in his research, he only cited Henry Gilpin’s diary in this section. While his estimates for Bank expenditures on printing and circulation are roughly in-line with my own, Govan did not estimate the loans to members of Congress and editors.
It is possible to improve upon these estimates with greater clarity and detail, though not without recognizing significant challenges and demanding a careful analysis of sources. Financial statements are scattered and contain incomplete information. Antebellum era financiers and politicians had yet to develop a standardized terminology to describe credit instruments and Biddle did not record some of his more clandestine maneuvers in the bank’s account books.
Sorting out the difference between loans that clearly had a corrupt intent and those that were merely providing convenient credit facilities, moreover, can be more of an art form than science. A list of the Bank’s “advancements” to members of Congress in one government report led one political scientist to affirm the Jacksonian charge of bribery, but closer inspection shows that the advancements were more likely just standard payments to members of Congress for their salary. The BUS, as the Treasury Department’s fiscal agent, facilitated the collection and distribution of all public moneys, including payments to public officials.
To move beyond what previous historians have done, it is important to distinguish between loans and expenditures. Lending was often the sole function that enabled a bank’s continued profitability and existence. We do not gain much insight in terms of the Second Bank’s influence by adding up the total dollar amounts of various loans over time since a mere summation cannot tell us whether each loan was repaid, renewed, or defaulted.
Biddle’s secret loans to editors certainly warranted criticism and evinced bribery, but most loans to editors and members of Congress did not constitute a grievous threat to democratic institutions in the way that Jacksonians claimed. Our interpretation changes, however, when we consider the Bank’s spending, particularly since much of the spending was intended to influence voter behavior, the terms of debate, or the character of the public sphere. Even Biddle’s political allies in the Whig-led Senate of 1834 criticized the instances in which the Bank spent its own money to secure a new charter.
THE BEST available evidence I have gathered indicates that the bank spent somewhere between $50,000 and $100,000 from the start of Jackson’s first term to the veto in July 1832. This sum included payments to various agents (confidential and otherwise) and orders for the printing and dissemination of sundry reports, articles, treatises, pamphlets, editorials, and other documents. In the same period, the bank loaned about $150,000 to $200,000 to members of Congress and perhaps $100,000 to editors.
One hundred thousand dollars in 1832 would be equivalent to several million dollars today, though there are many caveats to any estimate ranging over such a long period of time. For comparison, we might consider that the size of the U.S. economy in 1830, as measured in gross domestic product (GDP), was approximately $1 billion. The U.S. federal budget for 1832 was $34.6 million, which was about the same amount as the bank’s paid-in capital stock.
If Biddle spent and lent so much money in an effort to secure a new charter, why did he fail? For one, his chief media allies — Webb, Green, and Gales and Seaton — were poor businessmen and lacked the energy and enthusiasm of their anti-BUS rivals. And because of Jackson’s opposition, Biddle needed a two-thirds majority in both houses of Congress to obtain a new charter, an exceedingly tall order with a popular president and a nation increasingly polarizing along partisan lines.
As I’ve written elsewhere, the Jacksonians appropriated publicly-funded patronage networks in state and federal bureaucracies to counter the Bank’s prowess. An unnamed BUS officer at the branch office in Richmond, Virginia provided an additional reason: corporate lobbying could backfire. In his view, if Biddle sent pro-BUS material there, “certain demagogues in the district” would “indulge in the most shameless misrepresentations, and invectives against the Bank.” Not only was this a lesson that public relations campaigns could backfire, but that donations and favorable media coverage in and of themselves, whether in 1832 or in the twenty-first century, do not guarantee any particular outcome, even if they shape political behavior in powerful ways.
About the Author:
Stephen W. Campbell is a historian, author, and lecturer who teaches in the history department at Cal Poly Pomona. He holds a master’s degree in history from CSU Sacramento and a doctorate in history from UC Santa Barbara. A California native and early-19th US scholar who specializes in political and economic history, Campbell has authored several peer reviewed articles and has been teaching college-level history courses since 2007. His book, The Bank War and the Partisan Press: Newspapers, Financial Institutions, and the Post Office, has recently been published by the University Press of Kansas. You can find him on Twitter at @Historian_Steve. He also maintains a website at: http://www.historianstevecampbell.com
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Senate Document No. 104, 21st Congress, 1st Session, Serial Volume 193, 1–8. Evidence for Biddle’s authorship of this report is presented in Thomas Payne Govan, Nicholas Biddle, Nationalist and Public Banker, 1786–1844 (Chicago: University of Chicago Press, 1959), 125–127. Register of Debates, 21st Congress, 1st Session, House, Appendix, 104–133.
House of Representatives Report No. 460, 22nd Congress, 1st Session, Serial Volume 227, 284.
Sen. Doc. No. 17, 23rd Congress, 2nd Session, Serial 267, 322–325; H. R. Rept. No. 460, Serial 227, 292–293. Tucker to Biddle, January 26 and April 8, 1831, NicholasBiddle Papers, Library of Congress.
“Report of a Committee of Directors of the Bank of the United States,” December 3, 1833, Manuscripts and Political Papers, 39-41, Independence National Historical Park, Philadelphia, PA.
Gallatin to Biddle, February 17, 1831; Burrows to Biddle, February 13 and 17, 1831, Biddle Papers.
Norvell to Biddle, March 11, 1831, Biddle Papers.
Register of Debates, House, Appendix, 22nd Congress, 1st Session, 33–46. Sen Doc. No. 17, Serial 267, 313; William A. Ames, A History of the National Intelligencer (Chapel Hill: University of North Carolina Press, 1972), 172–225.
H. R. Rept. No. 460, Serial 227, 109, 190, 297–327, 369–410, 553-557. Cadwalader to Biddle, March 14, 1832, Cadwalader Family Papers, Box 98, Historical Society of Pennsylvania, Philadelphia.
Robert V. Remini, Andrew Jackson and the Bank War (New York: W.W. Norton & Company, 1967), 99; Govan, Nicholas Biddle, Nationalist and Public Banker, 1786–1844, 241.
I elaborate on this point in Chapter 4 of my book. James A. Morrison, “This Means (Bank) War! Corruption and Credible Commitments in the Collapse of the Second Bank of the United States,” Journal of the History of Economic Thought 37, no. 2 (2015): 238–239; H. R. Rept. No. 460, 270, 379, 424, 532, 568–571. Sen. Doc. No. 17, 320–321.
Of all congressional reports on the topic of Biddle’s spending, Senate Document 17, published in 1834, has proved the most useful for dividing transactions into loans to members of Congress; loans to newspaper editors; and BUS expenditures on circulating reports, treatises, etc.
According to a Senate report, the bank’s loans to congressmen started before Jackson’s election (and thus the before the Bank War) and stayed relatively consistent between 1826 and 1834. In 1826, the BUS issued loans totaling $237,436 to members of Congress. In 1834 the figure was $238,586. Although the figure of $478,069 in 1832 was a notable outlier and may have suggested increased spending during an election year and during the time when the BUS charter was before Congress, the report included asterisks that explain this temporary increase. The Senate report did not list the dates or terms of the loans. S. Doc. No. 17, 320–321.
My estimate for the bank’s expenditures on printing orders is based primarily on two sources. One of them is from page 40 of the Bank’s directors report, which stated that between December 1829 and December 1833 the bank spent $58,000 to defend itself. This sum included printing and circulating reports to Congress, speeches in Congress, and other miscellaneous publications. Most of this period occurred before the veto. It is possible that the directors’ report understated the Bank’s total spending since it did not include the bribe money issued to Norvell and the source itself originated from the Bank and would therefore present the Bank in the best possible light. The other source is S. Doc. No. 17, 320, which listed a figure of $94,708.25 for the period of January 1829 to September 1834. If we subtract the period between the July 1832 veto and September 1834, the remainder would roughly match the figure presented in the directors’ report.
My estimate for the bank’s loans to newspaper editors and members of Congress is based on figures published in several sources: H. R. Rept. No. 460, Serial 227, 108–110 lists loans of several thousand dollars to Thomas Ritchie and Gales and Seaton. The two tables presented on pages 320–321 of Sen. Doc. No. 17 do not indicate if the loans issued to members of Congress were intended to influence voting on the BUS. There is also Biddle’s own estimate, which appears in Reginald Charles McGrane, ed., The Correspondence of Nicholas Biddle: Dealing With National Affairs, 1807-1844 (Boston: Houghton Mifflin Company, 1919), 357–359. The available documentary evidence is incomplete with regard to the terms of the loans issued to editors and congressmen, including principal, interest, duration, security, renewal, etc.
A useful website for converting dollar amounts in the past to their equivalent in today’s dollars is Louis Johnston and Samuel H. Williamson, “Seven Ways to Compute the Relative Value of a U.S. Dollar Amount—1774 to Present,” MeasuringWorth, 2013, available at http://www.measuringworth.com/uscompare/, accessed December 19, 2014. One can also use this website to obtain GDP numbers for past years (hence, the figure of $1 billion). The U.S. Treasury Department’s estimate for the 1832 federal budget of $34,611,466.03 appeared in House Doc. No. 3, 22nd Congress, 2nd Session, Serial 233, 1–4.
Lispenard Stewart, “In the Matter of Proving the Last Will and Testament of the Late Robert Stewart, Esq.,” January 24, 1844, 12–13; “Indenture,” James Watson Webb to Daniel E. Tylee and Stephen Webb, December 8, 1832, in James Watson Webb Papers, Yale University Library, New Haven, CT; For the debts of Gales and Seaton, including those owed to the BUS, see Gales to Biddle, August 8, 1832, Simon Gratz Collection, Case 8, Box 10, Gales Folder, HSP. Sen. Doc. No. 17, 40, 319; Ames, History of the National Intelligencer, 152-153; 214; 219–235.
Unknown to Biddle, March 17, 1831,Biddle Papers. The unknown correspondent may have been James Robertson, the cashier at the BUS branch office in Richmond. H. R. Rept. No. 460, Serial 227, 518.