Second Bank of the United States facts for kids
The north façade of the Bank on Chestnut Street
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| Public–private partnership | |
| Industry | Banking |
| Fate | Liquidated |
| Founded | 1816 |
| Headquarters | Philadelphia |
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Key people
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The Second Bank of the United States was a very important bank in Philadelphia, Pennsylvania. It was the second national bank in the United States. It operated for 20 years, from 1816 to 1836. Its official name was "The President, Directors, and Company, of the Bank of the United States."
This bank was a private company, but it also had public duties. It handled all the money for the U.S. Government. It also reported to Congress and the U.S. Treasury. The federal government owned 20% of the bank, making it the biggest owner. About 4,000 private investors owned the other 80%. Many of these investors were from Europe. At the time, it was the largest money-related company in the world.
The main job of the bank was to control the money that private banks created. It also helped create a strong and stable national currency. The government's money kept at the bank gave it the power to do this.
The Second Bank was based on an idea from Alexander Hamilton. President James Madison approved its creation in 1816. It opened in Philadelphia on January 7, 1817. By 1832, it had 25 branch offices across the country.
Efforts to keep the bank open caused a big fight during the 1832 United States presidential election. The bank's president, Nicholas Biddle, and his supporters, like Henry Clay, argued with President Andrew Jackson. Jackson wanted to get rid of the bank. This fight was called the "Bank War." The bank did not get its charter renewed. It became a private company in 1836 and closed down in 1841.
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History of the Bank
Why the Bank Was Created
After the War of 1812, the U.S. government had money problems. There was no clear system for currency, and the economy was messy. Many people wanted a central bank to help fix these issues.
The time after the war was known as the Era of Good Feelings. People supported national programs, like a new bank. Leaders from the South and West, such as John C. Calhoun and Henry Clay, helped get the bank approved. President James Madison signed the law on April 10, 1816.
Some people did not like the idea of a national bank. They believed it was against the U.S. Constitution. They also worried it would hurt farmers and give too much power to the government. Private banks also opposed it because the national bank would control their lending. These groups later helped President Andrew Jackson fight against the bank.
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How the Bank Worked
The Second Bank started when Europe was recovering from the Napoleonic Wars. Its job was to stop private banks from printing too much paper money. Too much money could cause a financial bubble and a crash. The bank also aimed to help people get loans for businesses and farms.
The first president of the bank was William Jones. Under his leadership, the bank did not control the paper money from its branches well. This led to a land boom after the war. When the U.S. economy crashed in the Panic of 1819, the bank was blamed. Its strict money policies made the problems worse, causing job losses and falling property values. Some bank officials were also found to have committed fraud.
Jones resigned in 1819. Langdon Cheves took over and tried to fix the bank by limiting loans. This helped stabilize the bank but also made the economic problems last longer. Many Americans began to doubt the bank.
In 1823, Nicholas Biddle became the bank's third president. Under Biddle, the bank became very strong. It created a reliable system for national credit and currency. From 1823 to 1833, Biddle carefully increased loans, helping the American economy grow.
Jackson's Bank War
By 1829, when Andrew Jackson became president, the bank seemed stable. The Supreme Court had said it was constitutional. The U.S. Treasury found it useful, and the currency was strong. Most people had a good opinion of the bank.
However, Jackson's government attacked the bank in 1829. They said it did not create a stable currency and was not constitutional. Congress disagreed, saying the bank was important. Jackson still believed the bank was corrupt and a danger to American freedom.
Biddle tried to reach a deal with Jackson, but it failed. Jackson and his supporters kept criticizing the bank. This led to a push by Henry Clay and his allies to renew the bank's charter early. This started the "Bank War" and made the bank a central issue in the 1832 United States presidential election.
Jackson won the election easily, promising to get rid of the bank. He vetoed the bill to renew its charter. Then, he removed all federal money from the bank. In 1833, government money was moved to other private banks. This ended the Second Bank's role in controlling the nation's money.
Biddle tried to cause a financial crisis to save the bank. But people soon turned against his actions. All efforts to renew the bank's charter failed.
Becoming a State Bank
In February 1836, the bank became a private company under Pennsylvania law. A shortage of hard money followed, leading to the Panic of 1837. This economic downturn lasted about seven years. The bank stopped payments in 1839 and was fully closed in 1841.
Branch Locations
The bank had many branches. Here are some of the cities where they opened in 1817:
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Bank Presidents
- William Jones, 1817–1819
- James Fisher, 1819 (Acting)
- Langdon Cheves, 1819–1823
- Nicholas Biddle, 1823–1836
How the Bank Operated
The Second Bank of the United States was like a central bank for America. It was similar to the Bank of England or the Bank of France. But there was one big difference: the U.S. government owned 20% of it. Other central banks at that time were fully private.
The bank could have up to $35 million in capital. The government's share was $7.5 million. The bank also had to pay the government $1.5 million for the right to use public money. It had to report to the U.S. Treasury and Congress.
As the government's main financial agent, the bank did many things. It held and moved all U.S. government money. It also handled all government payments and tax collections. The bank was the "depository of the federal government."
The bank had 25 directors. The President of the United States appointed five of them. These government-appointed directors could not work for other banks. Two of the three bank presidents, William Jones and Nicholas Biddle, were chosen from these government directors.
The main office was in Philadelphia. The bank could open branches wherever it thought best. These branches were protected from state taxes.
Controlling Money Supply
The main job of the Second Bank was to control how much paper money private banks printed. Private banks made a lot of money by issuing their own notes. The national bank was supposed to keep this in check.
The bank helped spread credit, allowing more loans for farmers, small businesses, and entrepreneurs. This helped the economy grow quickly and healthily.
Historian Bray Hammond explained how the bank controlled inflation:
The [BUS] received checks and notes from local banks. It then asked these local banks to pay for these notes with gold or silver. This was because the [BUS] made the money available to the Treasury right away. Since local banks had to pay in gold or silver, this pressure automatically controlled how much they lent. The more they lent, the more notes they had out, and the more gold/silver they had to pay. Losing gold/silver reduced their ability to lend more.
This system was meant to prevent too much speculation and financial crises. Private banks did not like this system. It forced them to keep enough gold and silver to pay their debts to the U.S. Treasury. The number of private banks grew a lot, from 31 in 1801 to 788 in 1837. This meant the Second Bank faced strong opposition from these banks during Jackson's time.
Building Design
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Second Bank of the United States
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Drawing in an 1875 book
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| Location | 420 Chestnut Street Philadelphia, Pennsylvania |
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| Built | 1818–1824 |
| Architect | William Strickland |
| Architectural style | Greek Revival |
| NRHP reference No. | 87001293 |
| Significant dates | |
| Added to NRHP | May 4, 1987 |
| Designated NHL | May 4, 1987 |
The architect of the Second Bank of the United States was William Strickland. He was a student of Benjamin Henry Latrobe, who is often called America's first professional architect. Both Strickland and Latrobe liked the Greek Revival style. Strickland designed many other public buildings in this style.
Strickland's design for the Second Bank looks like the Parthenon in Athens. It is an early and important example of Greek Revival architecture. You can see this style in the front and back of the building. There are large steps leading up to the main level. On top of these steps, Strickland placed eight large Doric columns. These columns have a simple top section and a triangular pediment. The building looks like an ancient Greek temple.
The building's outside walls are made of Pennsylvania blue marble. Over time, some parts of the stone have worn away. This is most noticeable on the columns. Construction of the bank lasted from 1819 to 1824.
The Greek Revival style of the Second Bank is different from the earlier Federal style of the First Bank of the United States. The First Bank building is also in Philadelphia. It has more decorative Corinthian columns and looks more like a Roman villa than a Greek temple.
What the Building is Used For Now
After the bank closed in 1841, the building was used for different things. Today, it is part of Independence National Historical Park in Philadelphia. The building is open to the public for free. It is now an art gallery. It holds a large collection of portraits of important early Americans. Many of these were painted by Charles Willson Peale.
The building was named a National Historic Landmark in 1987. This was because of its important architecture and history.
The bank's branch in New York City was torn down in 1915. But its front part was saved. It was moved to the American Wing of the Metropolitan Museum of Art in 1924.
Images for kids
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Share of the Second Bank of the United States, issued June 18, 1838, signed by Nicholas Biddle.
See also
In Spanish: Segundo Banco de los Estados Unidos para niños
