Jackson also battled the Bank of the United States, one of the cornerstones of the American economy, during his term. Chartered in 1816 and headed by Nicholas Biddle, the Bank held all federal gold and silver deposits and thus had significant control over credit and monetary policy.
Many politicians, such as Henry Clay and Daniel Webster, believed that the Bank provided the needed stability in the transition to a market economy. Jackson, however, hated it because it was a private institution and thus outside government control. To him and to many debt-ridden western farmers, the Bank represented the corrupt moneyed interests of wealthy fat-cat investors who cared only about their own money.
Clay, in a bid to gain political support for the upcoming election of 1832, pushed a bill through Congress to renew the Bank’s charter for another twenty years. He hoped that this move would put Jackson in a bind: if the president signed the bill, he would loose western votes, but if he vetoed it, he would lose the support of wealthier eastern voters.
Jackson initiated a Bank War, vetoing the bill and claiming that the Bank of the United States was unconstitutional. Overjoyed, Clay had Jackson’s veto message printed and distributed throughout the country. The move backfired, however, because westerners hailed the president as a savior of the common American.
The Bank became a central issue in the election of 1832. Democrats nominated Jackson for a second term, while Clay ran on the National Republican ticket. In addition, the Anti-Masonic Party, the first third party in a U.S. presidential election, ran a candidate. Jackson received a greater number of popular votes and trounced Clay with 219 to 49 votes in the Electoral College.
Endowed with what he believed to be a mandate, Jackson immediately dismantled the Bank of the United States by withholding all federal gold and silver deposits and redepositing them in smaller “wildcat banks,” many of which were unsound. The Bank withered away until its charter finally expired in 1836. Afraid that the Bank’s death would encourage investors to overspeculate in western lands, Jackson also issued the Specie Circular in 1836, which required all land to be purchased with hard currency.