In the aftermath of President Andrew Jackson’s destroying the Second Bank of the United States, there were ramifications throughout the country, from top to bottom.
The United States Treasury placed deposits in state banks throughout the Union, which earned the name “pet banks.” Daniel Walker Howe, What Hath God Wrought: Transformation of America, 1815-1848, 388. These pet banks were not selected for deposits because of their financial stability, rather, they were selected “for their political friendship to the administration.” Id.
By a vote of 26 to 20, the Senate passed a motion of censure of Andrew Jackson, the only one in American history. See id. at 389. Jackson proclaimed that he had a right to remove cabinet members who did not follow his orders, in the wake of Louis McLane and Lewis Cass refusing to remove deposits from the pet banks. See id. at 389-90.
As a result of Jackson’s actions, there were defections from the Democratic Party. In fact, by 1836, 28 congressmen who had voted to recharter the Second Bank of the United States had left the Democratic Party. Id. at 390 citing David Crockett to John Durey, April 4, 1834, in The Boisterous Sea of Liberty, ed. David Brion Davis and Steven Mintz (New York, 1998), 375.
Jackson’s opponents adopted the name Whigs, the “traditional term for critics of executive usurpations.” Daniel Walker Howe, What Hath God Wrought: Transformation of America, 1815-1848, 390. Jackson and his supporters had said that the Second Bank of the United States was a “conspiracy against the public,” and the Whigs spun this against them, saying that the Jackson administration “represented a conspiracy by a few political favorites,” with the kitchen cabinet and pet banks infringing on the balanced government the Founding Fathers had left for them. Id.
Nicholas Biddle, the President of the Second Bank of the United States, hoped to show that Jackson was mistaken in his policies. He sought to create a credit contraction, which was successful, however, as interest rates rose, Americans began to blame the Second Bank of the United States. See id. at 391. Americans began to side with Jackson, seeing that Biddle simply held too much power. See id. His panic led to an economic downturn, and the media helped perpetuate that narrative, all to the benefit of Jackson.
As was so often the case in this era, Jackson walked away the victor, even with his censure from the Senate. In many ways, the populist policies had resulted in a loss for the American people, however, as the pet banks were considerably more corrupt and less efficient than the concept of the Second Bank of the United States.
While the immediate effects could not be felt, a new political party, the Whigs, was being formed. This new political party would become the main adversary for the Democrats for the next couple of decades. They would also be the political party that could substantively challenge the Jacksonian Democrats.