Nicholas Biddle (banker)

Nicholas Biddle
President of the Second Bank of the United States
In office
January 6, 1823 – March 3, 1836
President James Monroe
John Quincy Adams
Andrew Jackson
Preceded by Langdon Cheves
Succeeded by Position abolished
Personal details
Born (1786-01-08)January 8, 1786
Philadelphia, Pennsylvania, U.S.
Died February 27, 1844(1844-02-27) (aged 58)
Philadelphia, Pennsylvania, U.S.
Political party Whig
Spouse(s)
Jane Craig
(m. 1811; his death 1844)
Children 6, including Charles
Relatives Charles Biddle (Father)
Education University of Pennsylvania
Princeton University (BA)
Signature

Nicholas Biddle (January 8, 1786 – February 27, 1844) was an American financier who served as the third and last president of the Second Bank of the United States (chartered 1816–1836). He also served in the Pennsylvania General Assembly. He is best known for his role in the Bank War.

A member of the prominent Biddle family of Philadelphia, Nicholas Biddle worked for prominent officials such as John Armstrong Jr. and James Monroe in his youth. After returning to Philadelphia, he won election to the state legislature. While serving in the legislature, he successfully lobbied Congress and President Monroe for the creation of a new central bank, which became known as the Second Bank of the United States. In 1822, Monroe appointed Biddle as the third president of the bank. Biddle would continue to serve as the bank's president for several years, during which time he exercised power over the nation's money supply and interest rates, seeking to prevent economic crises.

At the request of Henry Clay and other Whigs, Biddle asked Democratic President Andrew Jackson to renew the bank's federal charter in 1832. Jackson, who held a deep hostility to many banks, declined to renew the charter, beginning a political debate known as the Bank War. When Jackson transferred the federal government's deposits to several state banks, Biddle raised interest rates, causing a mild economic recession. The federal charter expired in 1836, but the bank was re-chartered by Pennsylvania. Biddle continued to serve as president of the bank until 1839.

Ancestry and early life

Nicholas Biddle was born in the Philadelphia, in the Commonwealth of Pennsylvania.[1] Ancestors of the Biddle family immigrated to Pennsylvania when the proprietor, William Penn (of the Religious Society of Friends, or "Quakers") visited,[2] and fought in the pre-Revolutionary colonial struggles. His father, Charles, was prominent in his devotion to the cause of American independence[1] and served as Vice-President of the Supreme Executive Council of Pennsylvania, alongside Council President, the famous Benjamin Franklin (1705/06–1790).

An uncle with the same name, Nicholas Biddle (1750–1778), whose residence was also in Philadelphia, was an early colonial and American Revolutionary War naval hero, who died during the rebellion. Another uncle, Edward Biddle, was also a member of the First Continental Congress of 1774.[3] Young Nicholas's preparatory education was received at an academy in Philadelphia, where his progress was so rapid that he entered the class of 1799 in the University of Pennsylvania (formerly the "Academy", then the "College of Philadelphia" until 1791), and would have taken his degree at the age of thirteen had it not been deemed wise to keep him longer at his books. He was accordingly sent to Princeton (formerly the College of New Jersey), entered the sophomore class, and was graduated in 1801 as valedictorian, dividing the first honor of the class with his only rival.[1] His younger brother Thomas Biddle, a War of 1812 hero who died in a duel, should not be confused with his cousin by the same name, who became a leading exchange broker in Philadelphia.

Biddle was offered an official position before he had even finished his law studies. As secretary to John Armstrong Jr. (a Revolutionary War officer, delegate to the Continental Congress, later a U.S. Senator, United States minister to France, and Secretary of War under fourth President James Madison during the War of 1812), he went abroad in 1804 and was in Paris in the new French Empire at the time of Napoleon Bonaparte's coronation.[1] Afterward he participated in an audit related to the "Louisiana Purchase" by the United States of the territory west of the Mississippi River, acquiring his first experience in financial affairs. Biddle traveled extensively through Europe, returning to England to serve as secretary for James Monroe, then United States minister to the Court of St. James's (Kingdom of Great Britain). At Cambridge University, Biddle took part in a conversation with Cambridge professors involving comparison between modern Greek dialect and that of Homer; the incident captured Monroe's attention.[1]

In 1807, Biddle returned home to Philadelphia. He practiced law and wrote, contributing papers to different publications on various subjects, but chiefly in the fine arts. He became associate editor of a magazine called Port-Folio, which was published from 1806–23. When editor Joseph Dennie died in 1812, Biddle took over the magazine and lived on 7th Street, near Spruce Street.[1]

Lewis and Clark

Biddle also prepared western explorers Lewis and Clark's report for publication of their exploratory expedition up the Missouri River[1] through the newly acquired Louisiana Purchase from France (previously recently owned for generations by Spain), across the Rocky Mountains and the Oregon Country of the Pacific Northwest to the mouth of the Columbia River on the far Pacific coast, and he encouraged third President Thomas Jefferson to write an introductory memoir of his former aide and private secretary, Captain Meriwether Lewis, (1774–1809).[4] However, Biddle's name does not appear in the work, as he was elected to serve on the Pennsylvania state legislature (1810–1811) and was compelled to turn over the project to Paul Allen, (1775–1826), who then further supervised its publication. With the consent of all parties, Allen was then recognized as the editor.[1][4]

Pennsylvania General Assembly

Biddle served in the Pennsylvania House of Representatives in 1810, and then in the Pennsylvania State Senate in 1814.[5] He originated a bill favoring popular education almost a quarter of a century in advance of the times. Though the bill was initially defeated, it resurfaced repeatedly in different forms until, in 1836, the Pennsylvania "common-school" system was inaugurated as an indirect result of his efforts.[1][6]

Seventh President Andrew Jackson slays the many-headed monster that symbolizes the revived second Bank of the United States. Nicholas Biddle is in the middle, in the top hat.

The Bank of the United States

Early years

After Biddle moved to the Pennsylvania State Senate, he lobbied for the rechartering of the Second Bank of the United States. It was on this subject that he made his first speech, which attracted general attention at the time, and was warmly commended by Chief-Justice Marshall and other leaders of public opinion.[1]

The Bank had been revived and reorganized from the earlier First Bank of the United States, established in 1791 under the administration of first President George Washington, and after a chartered term of 20 years, expired in 1811 on the eve of the monetary pressures of the coming War of 1812 era. After economic hardships and problems financing the Government and its war measures during the War of 1812 to 1815, and a period of dormancy, a newly revived and reorganized Second Bank of the United States was rechartered in 1816 under fifth President James Monroe, who appointed Biddle as a Federal Government director and representative. When the Bank's president, Langdon Cheves, resigned in 1822, Biddle became its president. During his association with the Bank, President Monroe, under authority from Congress, directed him to prepare a "Commercial Digest" of the laws and trade regulations of the world and the various nations. For many years after, this Digest was regarded as an authority on the subject.[1]

In late 1818, $4 million of interest payments on the bonds previously sold in 1803 to pay for the "Louisiana Purchase" was due, in either gold or silver, to European investors. The U.S. Government had to get its hands on additional amounts of specie, i.e., silver or gold. As the Government's fiscal agent, the Bank was required to make this payment on behalf of the Government. The Bank was forced to demand that the private commercial banks that had been lent money in the form of "fiat" paper must now repay in specie, which was then sent to Europe to pay the government's creditors. This rather sudden contraction of the country's monetary base after three currency and rampant speculation based on debt led to the financial Panic of 1819.

Meanwhile, in Tennessee, General and future Presidential candidate, Andrew Jackson was hard-pressed to pay his debts during this period. He developed a lifelong hostility to all banks that were not completely backed by gold or silver deposits. This meant, above all, hostility to the new Second Bank of the United States..

As Bank president, Biddle occasionally engaged in the newly-developing national techniques of "central banking" – controlling the nation's money supply, regulating interest rates, lending to state banks, and acting as the U.S. Government's fiscal agent. When state banks became excessive in their lending practices, Biddle's Bank acted as a restraint. In a few instances, he even rescued state banks to prevent the risk of "contagion" spreading. He was also important in the 1833 establishment of Girard College, an early free private school for poor orphaned boys in Philadelphia, under the provisions of the will of his friend and former legal client, Stephen Girard (1750–1831), one of the wealthiest men in America. Girard had been the original promoter of the revival and reorganization of the Second Bank and its largest investor.[7]

On August 26, 1831, Biddle's brother, Thomas, a War of 1812 veteran, was killed in a duel on "Bloody Island" on the Mississippi River at St. Louis, Missouri with U.S. Representative (Congressman) Spencer Pettis. Thomas had taken offense to Pettis' criticizing Nicholas at the bank. After an exchange of letters to the editor of a newspaper, Biddle accosted an ill Pettis in his hotel room. After Pettis recovered, he then challenged Thomas to a duel, and both were killed when they exchanged shots from five feet apart.[8]

Bank War

The Bank War began when seventh President Andrew Jackson began criticizing the Bank early in his first term. Biddle, at the urging of Henry Clay and other Bank supporters, upped the ante when he applied for the Bank's re-charter in January 1832.[1] This was four years before the charter was scheduled to expire at the end of two decades, and the hope was to force Jackson into making an unpopular decision that might cost him during an election year. But, once challenged, President Jackson decided to veto the bill anyway. Jackson, well known for his stubborn personality and steadfast leadership, still harbored ill-will toward Henry Clay of Kentucky from the earlier "Corrupt Bargain" accusation following the Presidential Election of 1824 which made him Secretary of State when appointed by the administration of the winner, sixth President John Quincy Adams.

At Biddle's direction, the Bank poured thousands of dollars into a campaign to defeat Jackson in the 1832 election. Biddle was told that this would only give credence to Jackson's theory that the Bank interfered in the American political process, but chose to dismiss the warning.[9] Ultimately, Clay's strategy failed, and in November he lost to Jackson, who was reelected to a second term.

In early 1833, Jackson, despite opposition from some members of his cabinet, decided to withdraw the Government's funds from the Bank.[10] The incumbent Secretary of the Treasury, Louis McLane, a member of Jackson's Cabinet, professed moderate support for the Bank. He therefore refused to withdraw the Federal funds directed by the President and would not resign, so Jackson then transferred him to the State Department.[11] McLane's successor, William J. Duane, was also opposed to the Bank, but would not carry out Jackson's orders either. After waiting four months, President Jackson summarily dismissed Duane, replacing him with Attorney General Roger B. Taney as a recess appointment when Congress was out of session.[12] In September 1833, Taney helped transfer the public deposits from the Bank to seven state-chartered banks. Faced with the loss of the Federal deposits, Biddle decided to raise interest rates and deliberately induce a recession. A mild financial panic ensued from late 1833 to mid-1834.[13] Intended to force Jackson into a compromise, the move backfired, increasing anti-Bank sentiment.[14][13] Meanwhile, Biddle and other Bank supporters attempted to renew the Bank's charter through the Congress on numerous occasions. All their attempts failed under the threat of a Jackson presidential veto.[13]

Demise of the bank

Finally, after the requisite twenty-year term, the Bank's charter expired in April 1836, but the financial institution continued as a state-chartered bank under the laws of Pennsylvania for several more years. As the Bank wound up its operations in the next five years, state-chartered banks in the West and South relaxed their lending standards, maintaining unsafe reserve ratios and contributing to the Panic of 1837. In 1839 Biddle resigned from his post as bank president, and in 1841, amidst the post-Panic recession, the Bank finally failed. Biddle was arrested and charged with fraud, but was acquitted. He died soon after, on February 27, 1844,[15] while still involved in the ensuing civil suits.

Family

In 1811 Biddle married Jane Margaret Craig (born 1792); the couple had six children including Charles John Biddle, who served in the United States Army and in the House of Representatives.[16]

Nicholas Biddle Estate

The Nicholas Biddle Estate in Bensalem Township, Pennsylvania, also known as "Andalusia", is a National Historic Landmark, registered with the National Park Service of the U.S. Department of the Interior.

Notes

  1. 1 2 3 4 5 6 7 8 9 10 11 12 Wilson & Fiske 1900.
  2. ↑ Lawmaking and Legislators in Pennsylvania, vol. 3, p. 338
  3. ↑ Lawmaking and Legislators in Pennsylvania, vol. 3, pp. 337–351
  4. 1 2 Cutright 1982, p. 34.
  5. ↑ American National Biography-Nicholas Biddle
  6. ↑ McGrane 1919, p. .
  7. ↑ A. B. Hepburn, A History of Currency in the United States (New York: The Macmillan Co., 1903; reprinted, August M. Kelly Publishers, 1967) p. 95
  8. ↑ Crack of the Pistol: Dueling in 19th Century Missouri – sos.mo.gov – Retrieved March 5, 2008
  9. ↑ Remini 1981, p. 376.
  10. ↑ Hill, Andrew T. (February 5, 2015). "The Second Bank of the United States (1816–1841)". Federal Reserve History. Retrieved July 8, 2017.
  11. ↑ Remini 1984, pp. 57–58; 171.
  12. ↑ Wilentz 2006, p. 395.
  13. 1 2 3 Wilentz 2006, pp. 396–400.
  14. ↑ Hill, Andrew T. (February 5, 2015). "The Second Bank of the United States (1816–1841)". Federal Reserve History. Archived from the original on July 11, 2017. Retrieved July 8, 2017.
  15. ↑ Chisholm 1911.
  16. ↑ University of Delaware: Biddle family papers

References

Secondary sources

  • Cutright, Paul Russell (July 1982), Contributions of Philadelphia to Lewis and Clark History, Portland, Oregon: Lewis and Clark Trail Heritage Foundation, Inc., p. 34, ISBN 0-9678887-0-0
  • McGrane, Reginald C., ed. (1919), The Correspondence of Nicholas Biddle
  • Remini, Robert V. (1981). Andrew Jackson and the Course of American Freedom, 1822–1832. New York: Harper & Row Publishers, Inc. ISBN 978-0-8018-5913-7.
  • Remini, Robert V. (1984). Andrew Jackson and the Course of American Democracy, 1833–1845. New York: Harper & Row Publishers, Inc. ISBN 0-8018-5913-1.
  • Wilentz, Sean (2006). The Rise of American Democracy: Jefferson to Lincoln. New York, New York: W.W. Norton & Company, Inc. ISBN 0-393-05820-4.

Primary sources

  • Wikisource Chisholm, Hugh, ed. (1911). "Biddle, Nicholas". Encyclopædia Britannica. 3 (11th ed.). Cambridge University Press.

Attribution:

  •  This article incorporates text from a publication now in the public domain: Wilson, James Grant; Fiske, John, eds. (1900). "Biddle, Nicholas, financier". Appletons' Cyclopædia of American Biography. New York: D. Appleton.

Further reading

  • Bodenhorn, Howard (2000), A History of Banking in Antebellum America: Financial Markets and Economic Development in an Era of Nation-Building, Cambridge University Press, ISBN 978-0-521-66285-7 . Stresses how all banks promoted faster growth in all regions.
  • Hammond, Bray (1957), Banks and Politics in America: from the Revolution to the Civil War, Princeton University Press . The standard history, Pulitzer prize 1958.
  • Kahan, Paul (2016), The Bank War: Andrew Jackson, Nicholas Biddle, and the Fight for American Finance, xii, Yardley: Westholme, p. 187
  • Remini, Robert V. (1967), Andrew Jackson and the Bank War: A Study in the Growth of Presidential Power, W.W. Norton & Company, ISBN 978-0-393-09757-3 .
  • Govan, Thomas Payne (1959), Nicholas Biddle: Nationalist and Public Banker, 1786–1844 . Comprehensive biography of Biddle.
  • Schlesinger, Arthur M, Jr. (1945), Age of Jackson . Pulitzer prize-winning history;
  • Taylor, George Rogers, ed. (1949), Jackson Versus Biddle: The Struggle over the Second Bank of the United States, D.C. Heath & Company . Primary and secondary sources.
  • Temin, Peter (1969), The Jacksonian Economy, W.W. Norton & Company .
  • Wilburn, Jean Alexander (1967), Biddle's Bank: The Crucial Years, New York: Columbia University Press, ISBN 978-1-131-55475-4 . Narrative history.
Business positions
Preceded by
Langdon Cheves		 President of the Second Bank of the United States
1823–1836		 Succeeded by
expiration of bank charter
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