In 1816, with James Monroe as president, Congress agreed to “charter a Second Bank for twenty years.” Daniel Walker Howe, What Hath God Wrought: Transformation of America, 1815-1848, 374.
The Second Bank of the United States “was the largest corporation in the country,” and effectively it was “the only really nationwide business.” Id. The Bank held tax receipts on deposit and handled the federal government’s transactions, and even issued its own paper currency, despite the fact that at that time, the government only issued coins. See id.
The Bank “made loans to other banks as well as to other businesses and individuals; unlike the Federal Reserve Bank of today, which is the debtor of its member banks.” Id. As a nationwide bank, it was able to expand or contract America’s money supply so as to mitigate a volatile economy. Id.
While the Bank was compared to the Bank of England in that it was viewed favorably, it did not have safeguards to prevent the misuse of its funds. The Bank had a habit of loaning to politicians and editors, which would create an appearance of impropriety in modern times and would be a conflict of interest.
The Bank was a fixture in the financial infrastructure of the country, leading up to the 1830s. It was a widely accepted idea that the Bank would continue to exist and loan money out. In that way, the Bank was analogous to the Federal Reserve in that it was underlying much of the nationwide economy but it was not prominent in every day life. It provided a considerable level of stability for the American economy at a time when the American economy was expanding with the burgeoning American territory.
With Andrew Jackson in the White House, the Bank would no longer enjoy the praise it had in the late 1810s and into the 1820s.