Second Bank of the United States

Quick Facts: Who was Second Bank of the United States?

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Second Bank of the United States

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Second federally authorized national bank (1816–1841) regulating U.S. credit.

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2Day Chrono-Wiki & Primary Historical Archives

Origins & Early Life

The Second Bank of the United States was the second federally authorized national bank in the United States, chartered under the Madison administration. Located in Philadelphia, Pennsylvania, the bank was authorized from February 1816 to January 1836. The bank's formal name, according to section 9 of its charter as passed by Congress, was "The President, Directors, and Company, of the Bank of the United States". While other banks in the United States were chartered by and only allowed to have branches in a single state, it was authorized to have branches in multiple states and lend money to the U.S. Government. A private corporation with public duties, the bank handled all fiscal transactions for the U.S. government, and was accountable to Congress and the U.S. Treasury.

Pivotal Works & Achievements

Twenty percent of its capital was owned by the federal government, the bank's single largest shareholder. Four thousand private investors held 80 percent of the bank's capital, including three thousand Europeans. The bulk of the stocks were held by a few hundred wealthy Americans. In its time, the institution was the largest monied corporation in the world. The essential function of the bank was to regulate the public credit issued by private banking institutions through the fiscal duties it performed for the U.S. Treasury, and to establish a sound and stable national currency.

Enduring Legacy & Impact

The federal deposits endowed the bank with its regulatory capacity. Modeled on Alexander Hamilton's First Bank of the United States, the Second Bank was chartered in 1816 by President James Madison – who in 1791 had attacked the First Bank as unconstitutional – and began operations at its main branch in Philadelphia on January 7, 1817, managing 25 branch offices nationwide by 1832. The efforts to renew the bank's charter put the institution at the center of the general election of 1832, in which the bank's president Nicholas Biddle and pro-bank National Republicans led by Henry Clay clashed with the "hard-money" Andrew Jackson administration and eastern banking interests in the Bank War. Failing to secure recharter, the Second Bank became a private corporation in 1836, and underwent liquidation in 1841. There would not be national banks again until the passage of the National Bank Act in 1863–1864.

Chronological Milestones & Life Events

1. 1816: 1816 Milestone — Located in Philadelphia, Pennsylvania, the bank was authorized from February 1816 to January 1836.
2. 1832: 1832 Milestone — The efforts to renew the bank's charter put the institution at the center of the general election of 1832, in which the bank's president Nicholas Biddle and pro-bank National Republicans led by Henry Clay clashed with the "hard-money" Andrew Jackson administration and eastern banking interests in the Bank War.
3. 1836: 1836 Milestone — Failing to secure recharter, the Second Bank became a private corporation in 1836, and underwent liquidation in 1841.
4. 1863: 1863 Milestone — There would not be national banks again until the passage of the National Bank Act in 1863–1864.

Historical Fact-Check Quiz: Second Bank of the United States

True or False: “The Second Bank of the United States was immediately successful in preventing all financial instability after its founding.”

Answer (FALSE ❌): The bank faced significant criticism following the Panic of 1819 due to its belated and poorly executed tight money policies.

Contemporary Figures & Related Historical Timelines

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• Aaron Burr — Historical peer (Died in 1836) (1836): American politician, lawyer, and statesman known for his role in the Jeffersonian era.
• André-Marie Ampère — Historical peer (Died in 1836) (1836): Founder of classical electromagnetism; inventor of the solenoid and electrical telegraph.
• Carl Czerny — Historical peer (Born in 1791) (1791): Austrian composer and pianist, renowned for his pedagogical works and connection to Beethoven and Liszt.
• Charles Babbage — Historical peer (Born in 1791) (1791): Pioneering polymath credited with originating the concept of the digital programmable computer.
• Abraham Gottlob Werner — Historical peer (Died in 1817) (1817): Pioneering German geologist, known for establishing early theories of Earth's crust.
• Adolphe, Grand Duke of Luxembourg — Historical peer (Born in 1817) (1817): Grand Duke of Luxembourg, ruling from 1890 until his death in 1905.

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