Jackson’s Fight With The ‘Money Power’ (June 1956 | Volume: 7, Issue: 4)

Jackson’s Fight With The ‘Money Power’

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Authors: Bray Hammond

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June 1956 | Volume 7, Issue 4

Editor's Note: Bray Hammond wrote this essay for American Heritage in 1956 and developed it into Banks and Politics in America from the Revolution to the Civil War, for which he won the Pulitzer Prize for history in 1958.


“Relief, sir!” interrupted the President. “Come not to me, sir! Go to the monster. It is folly, sir, to talk to Andrew Jackson. The government will not bow to the monster. … Andrew Jackson yet lives to put his foot upon the head of the monster and crush him to the dust.” 

The monster, “a hydra of corruption,” was known also as the Second Bank of the United States, chartered by Congress in 1816 as depository of the federal government, which was its principal stockholder and customer. The words were reported by a committee which called on President Jackson in the spring of 1834 to complain because he and Secretary of the Treasury Roger Taney had removed the federal deposits from the federal depository into what the Jacksonians called “selected banks” and others called “pet banks.” The President was disgusted with the committee.

“Andrew Jackson,” he exclaimed in the third person as before, “would never recharter that monster of corruption. Sooner than live in a country where such a power prevailed, he would seek an asylum in the wilds of Arabia.”

In effect, he had already put his foot on the monster and crushed him in the dust. He had done so by vetoing a new charter for the Bank and removing the federal accounts from its books. So long as the federal Bank had the federal accounts, it had been regulator of the currency and of credit in general. Its power to regulate had derived from the fact that the federal Treasury was the largest single transactor in the economy and the largest bank depositor. Receiving the checks and notes of local banks deposited with it by government collectors of revenue, it had had constantly to come back on the local banks for settlements of the amounts which the checks and notes called for. It had had to do so because it made those amounts immediately available to the Treasury, wherever desired. Since settlement by the local banks was in specie, i.e. silver and gold coin, the pressure for settlement automatically regulated local bank lending; for the more the local banks lent, the larger the amount of their notes and checks in use and the larger the sums they had to settle in specie. This loss of specie reduced their power to lend.

All this had made the federal Bank the regulator not alone of the currency but of bank lending in general, the restraint it had exerted being fully as effective as that of the twelve Federal Reserve Banks at present, though by a different process. With its life now limited to two more years and the government accounts removed from its books, it was already crushed but still writhing.

The Jacksonian attack on the Bank is an affair