U.S. National Bank

City: Washington

State: District of Columbia

Provision for a national bank modeled on the Bank of England was one of Alexander Hamilton's prescriptions for stabilizing the federal government's fiscal and monetary health. In 1791, Congress chartered the First Bank of the United States, which operated as a private bank and the government's depository. The Bank performed well, but opponents in Congress, upset with the Bank's restrictions on state banks, fearful of concentrations of federal power, and dubious of the Bank's constitutionality, defeated a re-charter bill in 1811. Difficulties associated with financing the War of 1812 demonstrated the need for a national bank, and in 1816 Congress chartered the Second Bank of the United States. Modeled after the First Bank, the Second Bank of the United States exercised commercial and central bank responsibilities. Under the leadership of Nicholas Biddle, the Second Bank became a powerful force in the national economy. Based in Philadelphia with branch offices in twenty-five cities including St. Louis by 1832, the Second Bank defined fiscal policy and regulated note issues and lending of state banks. Biddle's monetary policies roused opposition among Jacksonian Democrats and advocates of state banks, and in 1832 the Second Bank's re-charter became the chief issue in the presidential election. Andrew Jackson vetoed the Bank re-charter bill in July 1832, and he interpreted his victory in November as a mandate for his opposition to the Second Bank. In 1833, Jackson began withdrawing federal deposits from the Second Bank, and in 1836 the Second Bank's charter expired. Abraham Lincoln had supported the Second Bank in its conflict with President Jackson, and in 1835 Lincoln voted against several resolutions introduced in the Illinois General Assembly opposing the charter of a national bank and endorsing Jackson's conduct in the Bank War. After the demise of the Second Bank, state banks filled the void in the financial markets. Lincoln remained a strong proponent of a national bank and became a staunch critic of Martin Van Buren's Independent Treasury (Sub-Treasury) System. Lincoln's speech against the Independent Treasury (Sub-Treasury) System, delivered a day after Christmas in 1839, became important in the Whig campaign to unseat Van Buren in 1840. The so-called "free banking era" ending in 1863 when Congress passed the National Banking Act.

Howard Bodenhorn, "Banking and Finance," The Oxford Companion to United States History (New York: Oxford University Press, 2001), 61; Robert V. Remini, Andrew Jackson and the Bank War: A Study in the Growth of Presidential Power (New York: W. W. Norton, 1967); Michael Burlingame, Abraham Lincoln: A Life (Baltimore, MD: Johns Hopkins University Press, 2008), 1:96, 150-51; Speech of Mr. Lincoln, at a Political Discussion, in the Hall of the House of Representatives, December 1839, at Springfield, Illinois.