The Moneylender as Magistrate: Nicholas Biddle and the Ideological Origins of Central Banking in the United States

Abstract

Nicholas Biddle, the president of the Second Bank of the United States during its fateful battle with the Jackson Administration, was the nation’s first true central banker. He was also a prolific writer whose widely followed speeches, reports, and expository letters to editors and legislators made him the nation’s leading spokesperson for the rising power of finance capital. Relating Biddle’s little-studied legal, legislative, and literary experience to his better-known banking career, this paper considers in turn two fundamental problems of early American finance that Biddle confronted. One was a problem of regulation: while they were entrusted with quasi-sovereign authority over the money standard in the early United States, commercial banks could not actually control the circulation and value of the competing currencies they produced. Central banking, as Biddle conceived it, came partly in answer to bankers’ need to regulate the money supply as sovereigns once had. The second problem was one of representation: just when men of little or no property were gaining political power in the United States, and just when ordinary people were coming to rely on monetary transactions in qualitatively new ways, control over the supply of cash and credit was ceded to unelected bankers and faceless corporations. The logic of popular sovereignty appeared increasingly in tension with the sovereign privileges bestowed on state-chartered banks. Biddle’s vision of central banking arose, in large measure, in response to the ideological challenge of justifying the growing authority of banks and bankers in Jacksonian America.