Financing the War of 1812 proved difficult because of the lack of a central bank, and by the end of the war the financial system of the country was in chaos. Enough support was forthcoming in Congress and a new bank was chartered for 20 years. The second bank, capitalized at $35 million, operated much as did the first one, 25 branches being established.
After an initial period of difficulty during the presidency (1816–19) of William Jones, the bank was placed on a sound basis by Langdon Cheves (1819–22). It became especially prosperous under the management of Nicholas Biddle, but was criticized by state banks and frontiersmen on the grounds that it was too powerful and that it operated in the interests of the commercial classes of the East.
Opponents of the bank came into power with the election (1828) of Andrew Jackson. Although the bank's charter did not expire until 1836, Henry Clay persuaded Biddle to apply to Congress for a renewal in 1832. President Jackson vetoed the bill for its recharter, and the bank became a leading issue in his fight for reelection against Clay. Interpreting his victory at the polls as an expression of popular will on the subject, Jackson did not wait for the expiration of the bank's charter but began in 1833, through his new Secretary of the Treasury Roger B. Taney, to deposit government moneys in state banks, referred to by his opponents as "pet banks." Under Martin Van Buren's administration the Independent Treasury System was established to handle the government's funds.
The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2012, Columbia University Press. All rights reserved.