Second Bank of the U.S. engraving

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.

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By David N. Brunk


THE PANIC OF 1893 began a depression in the United States that lasted into 1897. Theories for the cause of the panic have included an inadequate money supply, a European depression, and a hit to national credit caused by the passage of the Sherman Silver Purchase Act. While historians such as Douglas Steeples and David O. Whittenhave pointed more generally to over-speculation, under-consumption, or even unavoidable economic law as the cause of the crisis, I argue that the failure of the Reading Railroad triggered the Panic of 1893.[1]

Just one year before the collapse, the Reading nearly secured a monopoly when it combined with two other companies to control the production and transportation of 50-60 percent of the anthracite coal used by northeastern cities. The company’s bold president Archibald Angus McLeod, earned the nickname “the Napoleon of railroad combination.”[2] In the period between the combination in February 1892 to collapse in February 1893, McLeod extended the company’s credit too far and estranged its most powerful financier, John Pierpont Morgan. Without Morgan’s support, the Reading became insolvent, sparking an unprecedented stock market collapse. The events leading up to the collapse illustrate how ineffectual government action, monopolistic attitudes, and divergent meanings of a company shaped how and why the Reading crumbled.


Financial Instability and the Panic of 1857

By Johnny Fulfer

FINANCE WAS NOT WELL UNDERSTOOD in the United States in the 1850s, and the notion of financial crises even less so. Many Americans viewed banking as a form of usury, while others leveraged the power of credit to seek their fortune in the American West. Antebellum finance was centered around the expansion of railroads, which led to the construction of 24,476 miles of rail by July 1, 1857. Thousands of Americans moved West in search of their fortune in the 1850s, an experience that coincided with speculation in land and railroad securities.

Investors took risks and directed their money—which was often borrowed—toward investments they expected to make the greatest return. Expected profits were dependent on the perceptions investors held of the broader economic landscape and how that environment would be in the future. Expectations were volatile, and investors often used economic indicators such as the growth rate of settlement in regions such as Kansas, to direct their money. Eventually, the rising level of risk would lead banks to contract loans and lead to a financial crisis.

The Panic of 1857 was not the first financial crisis in American history, but it was the first to spread rapidly throughout the country. News of the financial crisis that occurred just 20 years prior, in 1837, could only travel as fast as the postal service. The invention of the telegraph by Samuel F.B. Morse in 1844, made the news of the Panic of 1857 available to Americans around the country almost immediately. The Panic of 1857 was a confidence crisis that involved the failure of Ohio Life Insurance and Trust Company (Ohio Life), the end of the Crimean War, and excessive speculation in securities. This involved investors on both sides of the Atlantic, which produced uncertainty the American economy.

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