Monday, February 1, 2016

Man-Eating Banks and the Ghost of Andrew Jackson

Paul Kahan, The Bank War: Andrew Jackson, Nicholas Biddle, and the Fight for American Finance

Popular history remembers President Andrew Jackson for two things: oppressing Indians and hating corporations. Among corporations, he reserved special wrath for banks. When he made undoing the Second Bank of the United States his personal campaign, he turned American finance unprecedentedly partisan. But Bank president Nicholas Biddle didn’t go down quietly. Two gifted, headstrong leaders quickly turned the struggle for financial control into a war for America’s identity.

Historian Paul Kahan declares openly, from his introduction, that this book isn’t about the dead past. Historians have always interpreted the Bank War via current events, and following the catastrophic bank failures of 2007, this reëvaluation becomes even more important. Today’s competitions between Tea Party originalists and progressive activists play out, with eerie similarity, the rhetorical (and sometimes other) conflicts that propelled the Bank War, to general society’s great cost.

America’s first Congress chartered, and George Washington ratified, a Bank of the United States to stabilize America’s economy and print national currency. But Thomas Jefferson, that ardent anti-Federalist, hated such centralization of power. The Jeffersonian Democrats hounded the bank, and when its twenty-year charter expired, they let it die. The economic consequences were grave, and the federal government chartered the Second Bank of the United States at their first opportunity.

Andrew Jackson embodies American ideals of the self-made man. And yes, he came from nothing to achieve personal wealth and political authority. But his “self-made” wealth included a battalion of slaves, besides bounties awarded during the first Creek War. As America’s electoral process became more inclusive, Jackson parlayed these successes into his eventual Presidency. Once elected, he governed through personal bombast, and didn’t mind carrying personal grudges into office.

An anti-administration cartoon
showing President Jackson, who
exercised his veto authority as much as
all prior Presidents combined, as "King
Andrew the First." Click to enlarge.
By contrast, Princeton-educated Nicholas Biddle was Jackson’s polar opposite. Citified, intellectual, born into pre-Revolutionary political connections, Biddle parlayed his inherited privileges into an appointment, first to the Bank’s board, and ultimately into its presidency. Biddle pursued a proficient, national, non-partisan agenda, with remarkable success. He believed the Bank did good. And when Jackson’s personal attacks turned downright irrational, Biddle resolved to save his bank by whatever means possible.

Jackson’s anti-Bank policies, fueled by personal animus, quickly became his defining economic legacy, and not only his, but the Democratic Party’s for nearly a century. Kahan writes: “any history of the conflict between Biddle and Jackson over the bank’s recharter is necessarily a history of Jackson’s administration as a whole.” Considering Jackson’s unprecedentedly harsh actions against Native Americans, this statement smacks of white privilege, but its core remains solid.

Kahan describes the Bank War in language somewhere between a political thriller and a journalistic report of a total catastrophe. What starts as a war of words escalates into a competition of political blackmail, horse-trading loyalties, and utter spite. Jackson led Cabinet purges whenever he suspected disloyalty. Biddle used Bank resources to sabotage Administration policies that jeopardized the Bank. Both men believed their actions completely right and justified.

Before Jackson, the Democratic Party enjoyed near-unopposed rule. The trade-off was that it lacked rigorous policy, and basically installed government officials based on personality. Jackson transformed that: his demands for personal loyalty regarding the Bank gave the party its first-ever binding policy agenda. It also generated the Whig opposition, making American political elections competitive for the first time in two generations. Jackson’s Bank War essentially redrew America’s political allegiances.

One sees mirrors of modern personality-driven politics throughout this story. “Unburdened by self-reflection,” Kahan writes, “Jackson was incapable of viewing opposition to his policies as anything other than evidence of corruption and a personal affront that demanded an aggressive response.” Biddle proves hardly better; Kahan notes that, once committedly non-partisan (and a former Jackson voter), the Bank president eventually became as vindictive and irrationally motivated as Jackson.

History has passed its judgement on both sides. Lacking central authority to stabilize the economy, the post-Bank governments struggled with rapid fluctuations; as Catholic economist John C. Médaille notes, America’s economy between 1850 and 1940 was in recession fully forty percent of the time. Historically speaking, Jackson was wrong. His policies divided the country, undermined the economy, and commenced bitter partisan battles that ultimately culminated with the Civil War.

Yet Americans have largely forgotten Nicholas Biddle, while Andrew Jackson is on the $20 bill—ironically enough, since paper money was one reason he hated banks. Maybe we need to recall the Bank War more thoroughly. Paul Kahan is right; this story matters because it’s our story. And in today’s volatile economic conditions, the Bank War is more present, more relevant, than ever.

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