MORE than forty years have passed since Catterall's monograph on the second Bank of the United States was published, and, though that account has never been superseded, it antedates all recent literature on central banking and therefore presents inadequately the public purposes of the bank. Furthermore, it includes nothing about the bank's Pennsylvania successor, which failed, and thus omits the denouement of Biddle's conflict with Jackson. The inevitable effect of the failure, in the rough justice of history, was to make Jackson seem right and Biddle wrong; and this impression, especially in the absence of attention to the purpose and functions of the bank, seems in recent years to have been strengthened. I think it needs correction.
The Bank of the United States -- the B.U.S. as Biddle and others often called it -- was a national institution of complex beginnings, for its establishment in 1816 derived from the extreme fiscal needs of the federal government, the disorder of an unregulated currency, and the promotional ambitions of businessmen.1 The bank had an immense amount of private business -- as all central banks then had and as many still have -- yet it was even more definitely a government bank than was the Bank of England, the Bank of France, or any other similar institution at the time. The federal government owned one fifth of its capital and was its largest single stockholder, whereas the capital of other central banks was wholly private. Government ownership of central-bank stock has become common only in very recent years.2 Five of the bank's twentyfive directors, under the terms of its charter, were appointed by the President of the United States, and no one of these five might be a director of any other bank. Two of its three successive presidents -- William Jones and Nicholas Biddle -- were chosen from among these government directors. The charter made the bank depository of the government and accountable to Congress and the Secretary of the Treasury.
On this depository relation hinged control over the extension of credit by banks in general, which is the essential function of a central bank. The government's receipts arose principally from taxes paid____________________