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Rethinking the Jacksonian Economy: The Impact of the 1832 Bank Veto on Commercial Banking

Published online by Cambridge University Press:  08 September 2006

JANE KNODELL
JANE KNODELL
Affiliation:
Associate Professor; Department of Economics; Old Mill; University of Vermont; Burlington, VT 05405. E-mail: [email protected].
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Abstract

Revisiting an old debate between “traditional” historians and “New” economic historians about the short-run monetary effects of President Jackson's war on the Second Bank, I offer new arguments for the traditionalists. I develop a framework accounting for growth in commercial bank credit based on the “investment club” characteristics of antebellum state-chartered banking and apply it to state bank balance sheet data for 1830–1836. The removal of the Second Bank indeed magnified the boom in commercial banking, and the replacement of Second Bank branches with state-chartered banks as lenders and federal government depositories amplified the boom in frontier lands and state debt.

Type
ARTICLES
Information
The Journal of Economic History , Volume 66 , Issue 3 , September 2006 , pp. 541 - 574
Copyright
© 2006 The Economic History Association

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