The National Bank Controversy That Left a President Without a Party

In ‘This Week in History,’ Whigs worked to empower their party and corral support for a national bank only to see a Whig destroy their efforts.

(Right) John Tyler, after vetoing the charter for the Bank of the United States (Left), was evicted from the Whig party, which supported the charter of a national bank. Public Domain

In a sense, John Tyler was the first Whig Party president. His running mate, William Henry Harrison, had been president about as long as his inaugural speech. He spoke for nearly two hours in the freezing rain, caught a cold, which turned into pneumonia, and died on his 32nd day in office. Harrison had led the new Whig Party to a decisive victory over incumbent Martin Van Buren, a Democrat.

The Democrat Party had formed after the Era of Good Feelings, a decade of one-party rule by the Democratic-Republicans. That Era ended after the 1824 election controversy, which witnessed Andrew Jackson win the popular vote and the most electoral college votes but was defeated by John Quincy Adams when the vote went to the Henry Clay-led House of Representatives. Jackson thus formed his own party, the Democrats, and won the presidency in 1828 and 1832.

Much like the Democrats, other political parties formed from the Democratic-Republicans, including the National Republicans. There was also a burgeoning party in New York called the Anti-Masons. Despite strong anti-Jacksonian sentiment, the Democrats remained the dominant political force.

The First Bank

"Winter Scene in Philadelphia," 1811-circa 1813, by John Lewis Krimmel. The Bank of the United States is in the background. Metropolitan Museum of Art. CC0

Powerful political leaders, like Clay and Daniel Webster, and even John C. Calhoun, a Democrat, worked to form a singular party out of the splintered political groups, along with the Anti-Masons. The Whig Party officially took shape in 1834. The Whigs borrowed their name from the late-17th-century Whigs of Britain, who had originally formed to oppose the tyranny of King Charles II. The American Whigs believed they had their own king to oppose: “King Andrew.”

Jackson was a populist president, a politician who had the support of the common man, and had no hesitation in voicing his disdain for elites and the political establishment. Calhoun came to oppose his fellow Democrat in 1832 when Calhoun resigned as Jackson’s vice president during the Nullification Crisis, specifically because of the tariffs of 1828 and 1832. In this, Jackson supported federal power over states’ rights, but his stance against a national bank was the opposite.

The Bank of the United States had been the brainchild of Federalist Alexander Hamilton, a proposition strongly opposed by Thomas Jefferson, founder of the Democratic-Republicans. The First Bank was established in 1791 with a 20-year charter. In 1811, Congress voted not to renew the bank’s charter.

The Second Bank

When America declared war on Britain the following year, a national bank looked like a necessity. President James Madison, who had opposed the establishment of the First Bank of the United States, maintained an unfavorable view of a national bank. But as the war continued and the country’s economic woes worsened, Congress and the president looked for ways to pay for the conflict.

A promissory note issued by the Second Bank of the United States, Dec. 15, 1840, for the amount of $1,000. National Museum of American History. Public Domain

By 1814, politicians and businessmen alike looked to re-establish a national bank. At the start of the year, 150 New York City businessmen petitioned Congress to do so. By April, Madison reluctantly conceded the point. Twice that year, Calhoun issued bills to establish the bank, but both failed. With the Treaty of Ghent signed in December 1814, ending the war, Madison withdrew his support for the bank and Congress stopped pushing for it. Perhaps the economy would quickly self-correct without one.

The economy, however, did not improve. State banks had stopped redeeming their notes, causing confidence in such currencies to drop. The nation’s political and business leaders believed a uniform paper currency was needed, thus leading Treasury Secretary Alexander Dallas to call for a national bank. The Second Bank of the United States was established in April 1816, again with a 20-year charter.

The Whig Win

Twenty years removed from that moment was Jackson’s final year in office. His disdain for the national bank was obvious. It had been a point of controversy between the president and his avowed political enemies, the Whigs. The controversy was known as the Bank War, and when Jackson claimed “The Bank … is trying to kill me, but I will kill it,” he proved correct.

Lithograph by Edward W. Clay. The illustration praises Andrew Jackson for his destroying the Second Bank of the United States with his "Removal Notice" (removal of federal deposits). Bank president Nicolas Biddle portrayed as The Devil, along with several speculators and hirelings, flee as the bank collapses while Jackson's supporters cheer. Public Domain

Clay and Webster had led the charge to recharter the bank in 1836. Jackson, however, vetoed it. The bank was indeed dead. It remained so for another four years with Jackson’s vice president, Van Buren, succeeding him to the presidency.

For the Whigs, reestablishing the national bank was the highest priority. The Whig Party held its first national convention in 1839. They chose Harrison to be the party’s presidential candidate. To increase their chances in the 1840 election, they chose Tyler, a former Democrat-turned-Whig as vice president.

The timing of the Whig Party was perfect. The Jacksonian Democrat, Van Buren, had fallen out of favor with the American electorate and was trounced by Harrison 234 to 60 in the electoral college. Additionally, the Whigs won both houses of Congress. The march toward a third Bank of the United States looked unstoppable. That is, until Harrison decided to speak for nearly two hours without a hat or a coat on a wet and cold winter day.

The Whig Betrayal

A month later, on April 4, an “event so unexpected and so melancholy” was announced. Harrison was dead. The announcement added that “the last utterance of his lips expressed a fervent desire for the perpetuity of the Constitution and the preservation of its true principles.”

"Tyler Receiving the News of Harrison's Death." Book illustration from "The Lives of the Presidents." Library of Congress. Public Domain

It was evident that, despite being running mates, Harrison and Tyler differed on some of the Constitution’s “true principles.” Tyler did not view a national bank in keeping with those principles. When the Whig-led Congress issued its charter for the third Bank of the United States, which was primarily created by Clay, Tyler made his position clear.

It was during this week in history, on Aug. 16, 1841, that Tyler vetoed the bank charter, stating that he deemed Congress’s “right to incorporate a United States bank with power and right to establish offices of discount and deposit in the several States of this Union with or without their consent—a principle to which I have always heretofore been opposed and which can never obtain my sanction.”

What had been a long-term plan of brilliant political maneuvering had suddenly collapsed in on itself. Out of political necessity, the Whigs had unwittingly placed a Trojan horse within their own party by selecting Tyler as vice president, a position that had long been viewed as one of minor consequence.

The Whigs, however, would have a say—and a violent one at that. Two days after Tyler’s announcement, drunk and angry Whig supporters arrived on the White House lawn (then called the Executive Mansion). That night, on Aug. 18, the mob shouted and jeered at the president, threw rocks at the mansion, shot guns in the air, and even burned Tyler in effigy. Word of Tyler’s veto resulted in numerous demonstrations across the country. “Down with the veto” became a common, if not temporary, refrain.

By September, the Clay-led Whigs had expelled Tyler from the party, making him the only president to hold office without a party.

Although the National Banking Act, passed during the Civil War, attempted to establish a more uniform banking system and currency, the idea of a national bank would not be seriously revisited until the 20th century. After numerous economic convulsions, specifically the Panic of 1907, the idea was revisited, leading to the creation of the Federal Reserve System in 1913, in which there are 12 Federal Reserve Banks that continue make up the country’s central banking system.

The Eccles Building of the Federal Reserve, the central banking system of the United States. Public Domain

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