Both Andrew Jackson, he of the $20 bill, and banks being too big to fail are in the news. There is an interesting historical connection here in that Jackson’s fight with the 2nd Bank of the United States illustrates some of the issues about moneyed interest and breaking up that influence and banks.
As most of us know Founder Alexander Hamilton set the stage for a big national bank, replacing state banks as part of a centralizing, mercantilist approach consistent with his “English” policies. Within early America’s growingly competitive capitalistic system the first national bank provided a large sources of credit for commerce.
In 1816, Congress provided money to establish the 2nd Bank of the US with considerable power & influence to print money, provide loans, pay bills and yes, collect taxes as well as circulating dollars around the country to spark growth.
This Bank was a hybrid affair with most of the money coming from private investors but the government provided 1/5th of the bank and thus “owned” a 1/5 share.. something that became quite important in later battles.
By 1820 or so the Bank of the US had $35 million in capital which meant it had lots of influence. It could make money easy or hard to access and since it had investor stockholders its decisions could and did give "exclusive money-making opportunities to its stockholders.”
As historian Daniel Feller explains:
As historian Daniel Feller explains:
"the Bank of the United States helped the government to do its business
effectively and efficiently. But it also helped the people who owned stock in the bank. "
According to historian Michael Beschlos in “Presidential Courage: Brave Leaders and How They Changed America, 1789-1989.” The Bank had considerable power over average citizens and politicians as well. The well known Pol Henry Clay, for example, had a hidden “loan” from the Bank. Indeed “many of his political enemies had loans from the bank or were on its payroll. http://www.britannica.com/event/Bank-War
Andrew Jackson, a man of the 99% here, had his reasons to oppose the Bank:
- It was a dangerously centralized financial power
- It held an unconstitutional monopoly on finance that only helped the rich get richer
- It made the economy vulnerable to foreign and special interests
- It held too much influence over federal politicians
- It favored the North (where most financial centers were located) over the South and West
And, of course Bank President Nicholas Biddle, his agents and political allies opposed Jackson and made him look like a tyrant.
“ With an ability to spread vast sums of money among newspaper editors, Senators and Congressmen, Biddle seemed unassailable.” http://americastrust.us/presidentialcourage.html
Despite this and the threat to destroy the economy as Jackson campaigned for re-election (shades of today), Jackson prevailed.
When Congress, at Biddle’s behest, voted to renew the Bank’s charter Jackson vetoed the measure and gradually moved to cripple the Bank by withdrawing government money. Here's how he did it:
“On October 1, 1833, Jackson decreed that no more government money could be deposited into the (Bank) B.U.S. Instead, Jackson thought the states should have more control, so he made it easy for all kinds of individuals to charter their own institutions, many of which were classic fly-by-night operations. The banks then would often issue their own notes and a bit of trivia is the fact that the term "wildcat" originated long before it was used in the oil industry.” https://www.buyandhold.com/bh/en/education/history/2002/a_jackson_pt_4.html
Sort of a break up strategy in effect which ultimately succeeded in crippling the Bank. And enough of the 99% understood and supported this type of breakup. The Senate couldn't come up with a two-thirds majority to override the election year veto and Jackson's defeat of Clay in the election meant that the Bank was not renewed. What followed was not great economic times, but perhaps we can learn from that lesson too along with the influence of too-big-to- fail capital and its influence on politics and income disparity.
More at https://en.wikipedia.org/wiki/Bank_War