On this day in 1832, President Andrew Jackson vetoed the charter of the Second Bank of the United States. He argued the existence of a federal bank exacerbated inequality, making "the rich richer and the potent more powerful."
If Jackson wanted to create a more equitable economic system, his veto backfired. The end of the Second Bank was the start of the Free Banking era, also known as "wildcat banking." From 1836 to 1863 (when President Lincoln signed the National Bank Act), corrupt bankers prospered through loopholes in lax banking regulations, and ordinary Americans lost their savings to numerous bank failures. An 1892 article in the Evening Herald describes the time.
"The wildcat banker was ordinarily a speculator--trader without capital--a lobbyist or worse...
A lumber shanty or a shingle mill served for a banking house, and business was confined to the exchange of flimsy notes for convertible property. When specie was demanded in return for [banknotes] the bank failed. As it had no assets to look after, the banker packed his gripsack and sought fresh fields and pastures new.
His banknotes, to the amount of scores of thousands of dollars, remained in the pockets of swindled individuals, not worth the paper on which they were printed."
Check out a great video from the Philadelphia Fed, all about the history and impact of the 2nd Bank of US!
The image is from 1834 and is available at the Library of Congress: Andrew Jackson is roasted over the fires of "Public Opinion" by the figure of Justice, over the controversy surrounding his removal of federal deposits from the Second Bank of the United States... Read the entire summary here.