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Biddle, Nicholas - Overview, Personal Life, Career Details, Social and Economic Impact, Chronology: Nicholas Biddle

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Bank of the United States


A talented administrator and pragmatic businessman, Nicholas Biddle developed the Bank of the United States into a prototype of the modern central banking system. Using the power of the Bank to expand and contract the money supply, he played a prominent role in bringing order to the chaotic American marketplace and creating a stable currency.

Personal Life

A member of one of early America’s most aristocratic families, Nicholas Biddle was born January 8, 1786, in Philadelphia. His parents were Charles Biddle, a successful merchant and vice president of the Supreme Executive Council of Pennsylvania, and Hannah Shepard, the daughter of a North Carolina merchant. In 1810, Nicholas Biddle met and eventually married Jane Craig, whose father’s estate was one of the largest in Philadelphia.

Biddle was a precocious student whose parents took a keen interest in his education. He was admitted to the University of Pennsylvania at the age of 10 and three years later transferred to Princeton University as a sophomore. He graduated from there as valedictorian (the top-ranked person in his class) in September 1801 at the age of only 15.

Career Details

In the fall of 1804, Biddle joined General John Armstrong as a member of the American legation (diplomatic mission) to France, where he worked on claims resulting from the Louisiana Purchase. After spending about a year in that post, he toured Europe and Greece and then served in London as secretary to James Monroe, who was at that time the U.S. minister to Great Britain. It was during his lengthy stay overseas that Biddle gained valuable insights into the problems and techniques of international finance.

Biddle returned to the United States in September 1807. Three years later, in October 1810, he was elected to the Pennsylvania legislature. The highlight of his term came when he mounted an eloquent defense of the first Bank of the United States, which was facing a hostile attempt to deny its charter to operate. He declined renomination until 1812, when he returned to the legislature to support U.S. involvement in the War of 1812.

In 1818, Biddle was defeated in a race for the U.S. Congress. He was subsequently passed over by then-President Monroe for appointment to office because of their differing political views. However, after mismanagement of the second Bank of the United States prompted the removal of its president, Biddle was named one of five directors of the troubled institution.

Four years later, in 1822, Biddle assumed the presidency of the Bank. During his tenure, he dropped the restrictions his predecessor had imposed upon branch operations. The enlargement of credit operations stimulated the economy, which was still suffering from the effects of the Panic of 1819. Biddle increased the Bank’s profits and eventually gained complete control over its operations. Under his guidance, the Bank expanded to 29 branches. It also controlled one-fifth of the country’s loans and bank notes in circulation and one-third of the total bank deposits and specie (gold and silver).

Although he tried to remain neutral in the presidential race between John Quincy Adams and Andrew Jackson in 1828, Biddle came under fire amid allegations that some branches had exercised improper influence by refusing loans to Jackson’s supporters. Biddle’s defensive handling of the accusations only made the situation worse. In addition, Jackson harbored a strong personal prejudice against banks that was based not only on a general resentment of the power they wielded but also on his own unfortunate dealings with them. All of this caused the relationship between the Bank and the government to deteriorate rapidly following Jackson’s election to the presidency.

Uncertain about the Bank’s future, Biddle decided to ask for it to be rechartered in 1832 (which was four years earlier than necessary). Because it was an election year, he hoped that Jackson would not dare oppose the request for fear of losing popularity. Biddle had miscalculated, however. Jackson not only vetoed the recharter, he also publicly denounced the Bank of the United States as a monopoly that was under too much foreign influence. In spite of the goodwill Biddle had managed to create for the Bank, public opinion soon turned around to favor Jackson’s point of view.

Bolstered by his supporters, Jackson resolved to destroy the Bank. He directed the removal of almost $10 million in government deposits that were then placed in state institutions dubbed “pet banks.” Biddle responded by curtailing loans. Though such a move may have been necessary to protect the Bank, the restriction of credit dealt a serious blow to the U.S. economy. Bankruptcies multiplied, while wages and prices declined. Jackson made the crisis worse by declaring that the government would no longer accept branch drafts issued by the Bank for the payment of taxes.

In 1836, Biddle was forced to secure a charter from the Pennsylvania legislature to operate as a state bank. The loss of a central bank to provide order, combined with the overheating effect of government deposits in state banks, led to frenzied speculation and the Panic of 1837. Banks across the country—including Biddle’s new United States Bank of Pennsylvania—were forced to suspend payment of specie for the redemption of notes. Biddle was still the most prominent banker in the nation despite his ongoing battles with Jackson, he played an important role in trying to shore up the U.S. banking system. He managed to resume specie payments in August 1838 and also intervened heavily in the cotton market to prevent its collapse.

With order seemingly restored, Biddle resigned from his post in March 1839. That summer, however, the world was again plunged into financial chaos. Falling cotton prices and mismanagement by the Bank’s directors led to a second suspension of specie payments in October 1839. The Bank continued to operate, but its situation grew more and more unstable. Finally, in February 1841 it collapsed, taking Biddle’s personal fortune with it.

The Bank’s failure made Biddle the target of many lawsuits during the final years of his life. In 1842 he was arrested on charges of criminal conspiracy. Although he was eventually found innocent, he continued to be plagued with other legal problems until his death in 1844.

Social and Economic Impact

Biddle was a brilliant administrator who maintained complete control over the Bank of the United States. Unfortunately, his political instincts were less astute. Because he recognized the value of a central bank to the nation’s economy, he believed that all reasonable citizens recognized it as well. But his naivete proved disastrous.

Despite his failures, Biddle remains an imposing figure in American history. He understood the potential of the American economy and formulated a method for realizing it. With his background in international finance and relations, Biddle felt that a powerful central banking system would establish American prosperity and make the country stronger and more secure.

Chronology: Nicholas Biddle

1786: Born.

1801: Graduated as valedictorian from Princeton University at age 15.

1804: Worked in France as member of American legation.

1810: Elected to Pennsylvania legislature.

1818: Appointed director of Bank of the United States.

1822: Became president of Bank of the United States.

1836: Rechartered Bank of the United States as United States Bank of Pennsylvania.

1841: United States Bank collapsed.

1844: Died.

Although the American economy survived the crisis of 1839, it then experienced a period of exuberant economic growth characterized by wild speculation and uncertainty. By the late 1800s, the ruthless and sometimes illegal business activities of the so-called “robber barons” (including such notables as John D. Rockefeller, Jay Gould, and Cornelius Vanderbilt) had prompted calls for reform. One such change involved reestablishing a central banking system very similar to Biddle’s bank. But the struggle continues among policymakers to establish a system of “managed” economic growth without curtailing freedom or the fiercely independent spirit that characterizes American entrepreneurs.

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