key term - Second Bank of the United States

Definition

The Second Bank of the United States was a national bank chartered by Congress in 1816, serving as a successor to the first Bank of the United States. It played a crucial role in stabilizing the nation's currency and regulating credit, while also becoming a focal point for debates on federal power and states' rights, highlighting ongoing tensions in constitutional interpretations of federalism.

5 Must Know Facts For Your Next Test

1. The Second Bank was created in response to financial instability and inflation after the War of 1812, aiming to provide a stable currency and control credit.
2. It had a 20-year charter, which sparked significant political controversy and opposition from figures like President Andrew Jackson.
3. The bank's ability to regulate state banks and manage the nation's economy placed it at the center of debates about federal authority versus states' rights.
4. In 1832, President Jackson vetoed the renewal of its charter, leading to its eventual closure in 1836.
5. The failure of the Second Bank contributed to economic turbulence in the late 1830s, including the Panic of 1837, highlighting the consequences of banking policies.

Review Questions

• How did the establishment of the Second Bank of the United States reflect the principles of federalism in early American governance?
  • The establishment of the Second Bank represented an exercise of federal power aimed at addressing national economic issues after the War of 1812. By creating a centralized institution to manage currency and credit, it illustrated how the federal government sought to unify economic policies across states. However, this move also sparked significant backlash from those advocating for states' rights, showcasing the ongoing tension between federal authority and state sovereignty that defines federalism.
• Evaluate the impact of McCulloch v. Maryland on the Second Bank's operations and federalism in America.
  • McCulloch v. Maryland significantly bolstered the Second Bank by affirming its constitutionality and establishing that Congress had implied powers under the Necessary and Proper Clause. The Supreme Court ruled that states could not tax a federal institution, which reinforced federal supremacy over state actions. This decision highlighted how judicial interpretations could shape federalism by enabling greater federal control over economic institutions, thus expanding the scope of federal authority.
• Discuss how President Andrew Jackson's opposition to the Second Bank influenced modern perceptions of federalism in America.
  • Andrew Jackson's fierce opposition to the Second Bank marked a pivotal moment in American politics that shaped modern views on federalism. By vetoing its recharter and framing his battle as a fight against elite interests versus common citizens, he emphasized a populist perspective that resonated with many Americans. This conflict underscored a fundamental debate about the balance of power between state and federal governments, influencing future discussions on government intervention in economic matters and shaping attitudes towards centralized banking institutions.

Related terms

Federalism:

A political system in which power is divided between a central authority and constituent political units, such as states.

Bank War: The political struggle during the 1830s between President Andrew Jackson and supporters of the Second Bank over its rechartering and influence on American finance.

McCulloch v. Maryland:

A landmark Supreme Court case in 1819 that established the principle of implied powers and upheld the constitutionality of the Second Bank, reinforcing federal authority over state laws.