Nicholas Biddle

Biddle also edited the journals of the Lewis and Clark Expedition.[11] He encouraged President Thomas Jefferson to write an introductory memoir of his former aide and private secretary, Captain Meriwether Lewis (1774–1809).[12] Biddle's work would be published as a book in 1814 and would become the standard account of the expedition for more than a century.[13] But because he had been elected to the Pennsylvania state legislature, Biddle was compelled to hand over editorial responsibilities to Paul Allen (1775–1826), who supervised the project until its completion and appeared in print as the book's official editor.[12]

Biddle was elected as a Republican member of the Pennsylvania House of Representatives in 1810, and then in the Pennsylvania State Senate for the 1st district from 1813 to 1815.[14][15][16] He originated a bill favoring a free system of public schools—available to all Pennsylvanians regardless of their economic class—almost a quarter of a century in advance of the times.[17] Though the bill was initially defeated, it resurfaced repeatedly in different forms until, in 1836, the Pennsylvania "common-school" system was inaugurated as an indirect result of his efforts.[6]

Seventh President Andrew Jackson slays the many-headed monster that symbolizes the revived second Bank of the United States. Nicholas Biddle is in the middle, in the top hat.

After Biddle moved to the Pennsylvania State Senate, he lobbied for the rechartering of the First Bank of the United States.[18] It was on this subject that he made his first major speech, which attracted general attention at the time, and was warmly commended by Chief Justice John Marshall and other leaders of public opinion.[6]

The First Bank had been established in 1791 under the administration of President George Washington. Congress opted not to renew its twenty-year charter in 1811, and as a result, the First Bank closed its doors. After economic hardships, monetary pressures, and problems financing the federal government during the War of 1812, Congress and the president granted a new twenty-year charter to the Second Bank of the United States in 1816. The Second Bank was in many ways a revived and reorganized version of the First Bank. President James Monroe subsequently appointed Biddle as a government director. When Bank President Langdon Cheves resigned in 1822, Biddle became the institution's new president.[19] During his association with the Bank, President Monroe, under authority from Congress, directed him to prepare a "Commercial Digest" of the laws and trade regulations of the world and the various nations. For many years after, this Digest was regarded as an authority on the subject.[6]

In late 1818, $4 million of interest payments on the bonds previously sold in 1803 to pay for the Louisiana Purchase were due, in either gold or silver, to European investors. The Treasury Department, therefore, had to acquire additional amounts of specie. As the federal government's chief fiscal agent, the Bank was obligated to make these payments on behalf of the Treasury. The Bank demanded that private and state-chartered commercial banks, many of which had loaned excessively and previously served as fiscal agents during the War of 1812, now pay the Second Bank in specie, which was then sent to Europe to pay the federal government's creditors. This rather sudden contraction of the country's monetary base after three years of speculation helped contribute to the financial Panic of 1819.[20]

Meanwhile, in Tennessee, military hero and future presidential candidate Andrew Jackson was hard-pressed to pay his debts during this period. He developed a lifelong hostility to all banks that were not completely backed by gold or silver deposits. This meant, above all, hostility to the new Second Bank of the United States.[21]

As a banker, Biddle promulgated a nationalistic vision with an emphasis on regulation and flexibility. He was also innovative.[22] Biddle occasionally engaged in the relatively new techniques of central banking–-controlling the nation's money supply, regulating interest rates, lending to state banks, and acting as the Treasury Department's chief fiscal agent. When state banks became excessive in their lending practices, Biddle's Bank acted as a restraint. In a few instances, he even rescued state banks to prevent the risk of "contagion" spreading.[23]

In 1823, Biddle started concentrating the Bank's facilities in the West, Southwest, and South to meet the demands for credit generated by the expansion of land, cotton, and slavery. He did this by directing his branch officers to circulate large quantities of branch drafts and by buying and selling millions of dollars of bills of exchange.[24][25] As cotton moved downriver in the winter and spring months, merchants drew up bills of exchange representing the value of cotton exports, presenting them to the Bank's southern branches. Using its interregional network of branch offices and the transportation improvements then under way, the Bank would ship these bills to the Northeast where merchants could use them to pay for imported manufactured goods arriving from Great Britain in the summer and fall.[26] The result was that Biddle helped provide an economic infrastructure that facilitated long-distance trade, propagated a relatively stable and uniform currency, and played a major role in integrating and consolidating fiscal operations at the federal level.[27] Indeed, Biddle won praise for the Bank by making steady payments to reduce the country's public debt, by preventing a potentially harmful recession in the winter of 1825–1826, and more generally, by smoothing out variations in prices and trade.

He was also important in the 1833 establishment of Girard College, an early free private school for poor orphaned boys in Philadelphia, under the provisions of the will of his friend and former legal client, Stephen Girard (1750–1831), one of the wealthiest men in America. Girard had been the original promoter of the revival and reorganization of the Second Bank and its largest investor.[28]

The Bank War began when President Jackson started criticizing the Bank early in his first term. Beyond the long list of personal and ideological objections that Jackson maintained toward the Bank, there were rumors that Bank officers at some of the branch offices had interfered in the presidential contest of 1828 by providing financial assistance to the National Republican candidate, John Quincy Adams. Although Biddle traveled to the branch offices to examine the veracity of these claims in person, and denied them unequivocally, Jackson continued to believe that they were true.[29][30] In January 1832, Biddle submitted an application to Congress for a renewal of the Bank's twenty-year charter, four years before the current charter was due to expire. Henry Clay and other Bank supporters hoped to force Jackson into making an unpopular decision that might cost him during an election year,[6] but there were also pressures for an early application emanating from the Bank's stockholders and board of directors.[31] President Jackson vetoed the bill in a stunning move that carried significant consequences for the relationship between Congress and the executive branch.[32] The reasons for Jackson's veto were legion and included concerns over the Bank's monopoly power and concentrated wealth, constitutional scruples, states' rights, the Bank's foreign stockholders and ability to foreclose on large parcels of land, sectional animosity toward eastern financiers, and political patronage. An additional factor was Jackson's personality. The president was well known for his stubbornness[33] and continued to harbor resentment toward Clay from the earlier "Corrupt Bargain" accusation following the presidential election of 1824.

At Biddle's direction, the Bank poured tens of thousands of dollars into a campaign to defeat Jackson in the presidential election of 1832. This was a continuation of a strategy that one historian has referred to as one of the earliest examples in the country's history of an interregional corporate lobby and public relations campaign.[34] Articles, stockholders' reports, editorials, essays, philosophical treatises, petitions, pamphlets, and copies of congressional speeches were among the diverse forms of media that Biddle transmitted to various sections of the country through loans and Bank expenditures. Reports of unusually generous loans to pro-BUS politicians and even small bribes to sympathetic newspaper editors, the details of which came to light in a congressional report published in April 1832, helped convince hard-line Jacksonians that the corrupt "Monster Bank" must be destroyed.[35][36] Biddle was told that such vigorous campaign spending would only give credence to Jackson's theory that the Bank interfered in the American political process, but chose to dismiss the warning.[37] Ultimately, Clay's strategy failed, and in November he lost handily to Jackson, who was reelected to a second term.[38]

In early 1833, Jackson, despite opposition from some members of his cabinet, decided to withdraw the Treasury Department's public (or federal) deposits from the Bank.[39] The incumbent secretary of the treasury, Louis McLane, a member of Jackson's Cabinet, professed moderate support for the Bank. He therefore refused to withdraw the federal deposits directed by the president and would not resign, so Jackson then transferred him to the State Department.[40] McLane's successor, William J. Duane, was also opposed to the Bank, but would not carry out Jackson's orders either. After waiting four months, President Jackson summarily dismissed Duane, replacing him with Attorney General Roger B. Taney as a recess appointment when Congress was out of session.[41] In September 1833, Taney helped transfer the public deposits from the Bank to seven state-chartered banks. Faced with the loss of the federal deposits, Biddle decided to raise interest rates. A mild financial panic ensued from late 1833 to mid-1834.[42] Intended to force Jackson into a compromise and demonstrate the utility of a national bank for the nation's economy, the move had the opposite effect of increasing anti-Bank sentiment.[43][42] Meanwhile, Biddle and other Bank supporters attempted to renew the Bank's charter on numerous occasions. All their attempts failed because they did not have the two-thirds majorities in Congress to overcome a presidential veto.[42]

Share of the Second Bank of the United States, issued 18. June 1838, signed by Nicholas Biddle

The Second Bank's twenty-year charter expired in April 1836, but Biddle worked with the Pennsylvania state legislature to prolong the institution as a state-chartered bank, the United States Bank of Pennsylvania (BUSP). The BUSP remained open for several more years.[44] It was in the later years of his career that Biddle began to invest significant financial resources not only in internal improvement projects,[45] but also in the booming expansion of land, cotton, and slavery in the Old Southwest.[46][47]

In 1837 and 1838, Biddle secretively dispatched agents into the South to buy up several million dollars worth of cotton with the notes of state-chartered banks, all in an effort to restore the nation's credit and pay off foreign debts owed to British merchant bankers.[48] Critics called this an example of illegal cotton speculation and noted that the Bank's charter forbid the institution from purchasing commodities. Biddle also invested in and bailed out several state-chartered banks in the South whose capital was derived partially from slave mortgages. Some of these banks, including the Union Bank of Mississippi, financed the dispossession of Native Americans.[49][50] Indeed, post-notes issued by the BUSP helped conclude one of the treaties that removed the Cherokee from their ancestral lands.[51] In addition, Biddle purchased bonds in the Republic of Texas, opposed territorial expansion into Oregon, and denounced abolitionists.[52]

Meanwhile, in the absence of any regulatory oversight provided by a central bank, state-chartered banks in the West and South relaxed their lending standards, took greater on risks, maintained unsafe reserve ratios, and contributed to a credit bubble that eventually burst with the Panic of 1837. In 1839, after seeing his investment in cotton speculation backfire, Biddle resigned from his post as bank president, and in 1841, with the nation still reeling from depression, the Bank finally collapsed.[53] Because the BUSP had issued loans to financial institutions and individual actors who pledged slave mortgages as collateral, the BUSP tragically became one of the largest owners of plantations, slaves, and slave-grown products in Mississippi as debtors rushed to repay creditors during the economic downturn of the early 1840s.[54]

Biddle and a few of his colleagues had borrowed tens of thousands of dollars of cash from the BUSP on their own account without going through the normal lending process and without informing the Bank's board, and as a result, a grand jury indicted Biddle on charges of fraud in December 1841.[55] Biddle was arrested and forced to pay compensation to creditors using the remainder of his personal fortune. The charges were later dismissed.[44] On February 27, 1844, at the age of fifty-eight, Biddle died at the Andalusia estate from complications related to bronchitis and edema.[56] Funds from his wife's family supported the ongoing civil lawsuits that plagued Biddle toward the end of his life.[44][57]

• Biddle, Cordelia Frances (2021). Biddle, Jackson, and A Nation in Turmoil: The Infamous Bank War. Mechanicsburg, PA: Oxford Southern. ISBN 978-1-62006-487-0.
• Browning, Andrew H. (2019). The Panic of 1819: The First Great Depression. Columbia, MO: University of Missouri Press. ISBN 978-0-8262-7425-0.
• Campbell, Stephen W. (2019). The Bank War and the Partisan Press: Newspapers, Financial Institutions, and the Post Office in Jacksonian America. Lawrence, KS: University Press of Kansas. ISBN 978-0-7006-2744-8.
• Catterall, Ralph C.H. (1902). The Second Bank of the United States. Chicago, IL: University of Chicago Press. OCLC 894190.
• Cutright, Paul Russell (1982). Contributions of Philadelphia to Lewis and Clark History. Portland, OR: Lewis and Clark Trail Heritage Foundation, Inc. ISBN 0-9678887-0-0.
• Govan, Thomas Payne (1959). Nicholas Biddle: Nationalist and Public Banker, 1786–1844. University of Chicago Press. ISBN 978-0-608-16150-1.
• Hammond, Bray (1957). Banks and Politics in America from the Revolution to the Civil War. Princeton, NJ: Princeton University Press. ISBN 0-691-00553-2.
• Kilbourne, Richard H. Jr. (2006). Slave Agriculture and Financial Markets in Antebellum America: The Bank of the United States in Mississippi, 1831–1852. London: Pickering and Chatto. ISBN 978-1-85196-890-9.
• Knodell, Jane Ellen (2016). The Second Bank of the United States: "Central" Banker in an Era of Nation-building, 1816-1836. Taylor & Francis. ISBN 978-0-367-87022-5.
• Remini, Robert V. (1967). Andrew Jackson and the Bank War. New York: W.W. Norton & Co. ISBN 0-393-09757-9.
• Remini, Robert V. (1981). Andrew Jackson and the Course of American Freedom, 1822–1832. New York: Harper & Row Publishers, Inc. ISBN 978-0-8018-5913-7.
• Remini, Robert V. (1984). Andrew Jackson and the Course of American Democracy, 1833–1845. New York: Harper & Row Publishers, Inc. ISBN 0-8018-5913-1.
• Sklansky, Jeffrey (2017). Sovereign of the Market: The Money Question in Early America. University of Chicago Press. ISBN 978-0-226-48033-6.
• Smith, Walter Buckingham (1953). Economic Aspects of the Second Bank of the United States. Cambridge, MA: Harvard University Press. OCLC 473892431.
• Wilentz, Sean (2006). The Rise of American Democracy: Jefferson to Lincoln. New York, New York: W.W. Norton & Company, Inc. ISBN 0-393-05820-4.

• McGrane, Reginald C., ed. (1919), The Correspondence of Nicholas Biddle Dealing with National Affairs, 1807–1844, Boston: Houghton Mifflin, hdl:2027/hvd.hb0ekh, ISBN 9780722277881
• House of Representatives Report No. 460, 22nd Congress, 1st session, Serial Volume 227, Washington, 1832

• This article incorporates text from a publication now in the public domain: Wilson, J. G.; Fiske, J., eds. (1900). "Biddle, Nicholas, financier" . Appletons' Cyclopædia of American Biography. New York: D. Appleton.
• This article incorporates text from a publication now in the public domain: Chisholm, Hugh, ed. (1911). "Nicholas Biddle". Encyclopædia Britannica (11th ed.). Cambridge University Press.