This Means (Bank) War! Corruption and Credible Commitments in the Collapse of the Second Bank of the United States
Abstract: The demise of the US central bank in the 1830s “Bank War” remains one of the most significant shifts in the history of American political and economic development. Traditional accounts frame the bank as the casualty of the inevitable clash of hard-money and soft-money interests and ideologies. This paper re-examines this shift through the lens of modern international relations theory. It argues that this “war,” like so many interstate wars, could have been—and very nearly was—averted. In the months prior to the outbreak of hostilities, the bank’s president (Nicholas Biddle) and the US president (Andrew Jackson) agreed to a set of reforms that both sides preferred to fighting. Jackson, however, came to believe that no amount of reform could curb the bank’s hegemonic ascent. Facing the logic of preventive war, Jackson issued a decisive veto that initiated a “total war.” His triumph in the 1832 election sealed the bank’s fate. This paper thus offers a novel interpretation of this key historical episode; and it demonstrates the value of using international relations theory to understand intrastate political dynamics.
Journal of the History of Economic Thought 37(2): 221-45. (2015)