The Second Bank of the United States was approved on April 10, 1816, setting up a political showdown that would define a presidential election campaign, destroy the American economy and lead to the issuance of “Hard Times” tokens.
The Second Bank of the United States was a federally chartered private institution that was the closest the nation had to a central bank. It was created as the nascent nation transitioned from an agrarian economy to one based on manufacturing, and was a successor to Alexander Hamilton’s Bank of the United States, chartered from 1792 to 1812.
The Second Bank facilitated the transfer of funds from one region of the country to another and served as a storehouse for federal deposits. The bank also made loans to state and local governments, private individuals and businesses.
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Congress and the Treasury secretary had oversight of the bank, but it was a president who would have the most to say about the future of the agency.
The efforts to renew the bank’s charter put the institution at the center of the general election of 1832, in which the bank’s president, Nicholas Biddle, and pro-bank National Republicans led by Henry Clay clashed with President Andrew Jackson’s “hard-money” administration and Eastern banking interests.
The issue propelled Jackson to victory, but his action to weaken the bank before its charter expired in 1836, coupled with other financial crises around the world, not only caused financial calamity for the United States but doomed his successor to a one-term presidency.
It also ushered in perhaps the most entertaining of historical United States exonumia, known as “Hard Times tokens.”
Hard Times tokens were large-cent-sized copper pieces struck from about 1833 through 1843 that served as unofficial currency. These privately made pieces, comprising merchant, political and satirical pieces, were used during a time of political and financial crisis in the United States.
When Jackson campaigned for the presidency in 1828, he appealed to people that shared his belief that wealthy people held powerful political positions and made decisions that favored the rich. Once re-elected in 1832, not only did Jackson veto the bank’s petition to Congress to extend its charter, but he also removed federal funds from the bank, which would prove to be politically fatal.
Without the Bank of the United States, state banks attempted to fill the paper money gap and issued a large number of bank notes, which fueled inflation and further expansion. Hoping to halt the inflation and speculation in public lands, Jackson and his Treasury secretary, Levi Woodbury, issued the Specie Circular on July 11, 1836. The circular simply stated that as of Aug. 15, 1836, banks and others who received public money were required to accept only gold and silver coins in payment for public lands.
Instead of the intended results, the circular spelled the end of a time of economic prosperity — one that ultimately would stretch beyond the end of Jackson's second term in office. The circular set into motion a panic, and the public began hoarding specie. Without specie to pay out, banks and merchants began having financial troubles. Soon, banks and businesses across the nation failed; a depression ensued during the presidential term of Martin Van Buren, who had been Jackson’s vice president. The period of economic hardship during Van Buren’s presidency came to be known as the “Hard Times.”