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The
Second Bank of the United States was an even larger institution than the
first, with a capital of $ 35 million, of which again the government held
20% paid for in government securities. In its early years, the bank knew
mixed fortunes, first during the presidency of the expansive William Jones,
then as a reaction through the more contractive attitude of its second
president Langdon Cheeves. It’s real success came under the presidency of
the brilliant Nicholas Biddle, the progeny scion of a wealthy Philadelphia
family. Nicholas Biddle guided the Second National Bank from 1823 through to
the repeal of its charter in 1836 and then continued to operate it under a
Pennsylvania State charter for several years. Using the bank’s privilege to
operate branches in many states, Biddle built the institution into the most
powerful banking house of the United States of America. Overly eager to get
its charter extended without conditions, Biddle let the charter renewal
issue become a challenge for the re-election of Andrew Jackson. The latter
never forgave and the attacked the bank on issues ranging from
anti-constitutionality to outright monopoly charges. It’s charter failing to
be renewed, the Second Bank of the United States was continued for some time
under a Pennsylvania State charter but eventually failed, notably due to
Biddle’s more speculative management of its affairs.
Well
aware that banking was a very special and obviously profitable business, the
leading Federalists, notably in New York, were particularly conservative in
the chartering of new banks. As Hamilton and his Federalist cronies
controlled the Bank of New York, the state’s Republicans, under the guidance
of Hamilton’s political foe Aaron Burr used a stratagem to get their
chartered bank. The Manhattan Company was created in 1799 to supply New York
City with clean water. Among the bylaws in its charter was the possibility
to use its capital for banking operations. Thus was born one of the
forerunners of the famous Chase Manhattan Bank of New York. In a similar
way, the Chemical Bank, an outgrowth of the Chemical Manufacturing Company,
was brought into existence in a similar manner. It’s co-founders, the famous
Goelet brothers, were among the city’s leading real estate owners.
In
subsequent years many other banks were chartered in New York and in other
cities, bringing the total of chartered banks in the USA to 824 by 1850 and
1562 just before Civil War. Most of these institutions were rather small,
but some of them were already then solid financial institutions, whose
financial power was a key factor in the rapid expansion which characterized
the Gilded Age, the period of fast economic growth and wealth concentration
that followed the American Civil War. Most prominent among these early
chartered banks to emerge was the City Bank of New York, which had become
the preferred financial institution of New York’s leading merchant class,
under the able guidance of its president and chief stockholder, Moses
Taylor.
Bankers I > Index
and Introduction :
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