The Resurrection of A National Banking System
Though supported by President James Madison and his Treasury Secretary Albert Gallatin, opponents of the First Bank of the United States defeated recharter by a single vote in both the House and Senate in 1811. Opposition came from several fronts, including states’ rights advocates opposed to the doctrine of implied powers, private banking interests who objected to the regulatory effects of the BUS, and big mercantilists, including John Jacob Astor, who had disputes with the Bank’s directors.
The practical arguments in favor of reviving a national system of finance, as well as internal improvements and protective tariffs, were prompted by national security concerns during the War of 1812 and its aftermath which had “demonstrated the absolute necessity of a national banking system”
The roots for the resurrection of the Bank of the United States lay fundamentally in the transformation of America from a simple agrarian economy to one that was becoming interdependent with finance and industry. Vast western lands were opening for white settlement, accompanied by rapid development, enhanced by steam power and financial credit. Economic planning at the federal level was deemed necessary by Republican nationalists to promote expansion and encourage private enterprise.
In 1815, Secretary of State James Monroe informed President James Madison that a national bank “would attach the commercial part of the community in a much greater degree to the Government interest them in its operations…This is the great desideratum of our system.” Support for this “national system of money and finance” grew with the post-war economy and land boom, uniting the interests of eastern financiers with southern and western Republican nationalists who sought to “Republicanize Hamiltonian bank policy.” and “employ Hamiltonian means to Jeffersonian ends” The era of laissez faire was underway.
Read more about this topic: Bank War
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