A question on the minds of politicians and voters in 1832 America was whether the Second Bank of the United States, the country’s second “Hamiltonian” federal bank, was constitutional. Although Chief Justice John Marshall had ruled it so in his 1819 landmark McCulloch v. Maryland opinion, a September 18, 1832, letter from Marshall to his son James Keith, acquired for the John Marshall Historical Collection, reveals the subject of the federal bank’s potential demise was on Marshall’s mind, too.
The Chief Justice’s unanimous opinion in McCulloch not only affirmed that the formation of the Bank by an act of Congress met the requirements of the “Necessary and Proper Clause,” he also wrote that Congress could act on powers implied by the Constitution and that it was “appropriate and legitimate” to do so. Even so, by 1832, Americans were divided into pro-federal-bank and anti-federal-bank factions; the heated debate would define that year’s presidential election. Incumbent President Andrew Jackson believed the national bank was not only illegal but also corrupt and aristocratic, while his opponent, Henry Clay, claimed the bank was indispensable in righting the country’s listing financial ship. In July of 1832, Jackson vetoed a bill that would renew the federal bank’s charter, and that December, he handily won both the election and what had been dubbed the “Bank War.” The Second Bank of the U.S. closed in 1836.
The 1832 Marshall letter details to his son the selling of state-chartered bank stock, which had risen in price due to speculation that the federal charter of the Second Bank would not be renewed. In part, the letter reads: “I am confident that more cannot now be obtained, and am not sure that this price will hold. The rise is to be ascribed to the opinion that the bank of The United States will not be rechartered, and gentlemen speculate on a great rise in state stock when the present charter shall expire. All this is speculation.”
The personal artifact offers a unique vantage point from which to consider McCulloch v. Maryland, the 1832 presidential election, which birthed the modern Democratic Party, and the eventual formation of the Federal Reserve Bank in 1913. An interesting sidenote is that Marshall sold his seventeen shares of Second Bank stock ahead of the McCulloch ruling stating that he did “not choose to remain a stockholder in that institution, as questions would come before the Supreme Court of the United States in which the bank might be concerned.”