Banking on the Public's Trust: The Image of Commercial Banks in the Early American Republic

Since 2006, the reputation of the American banking industry has been in a precipitous decline.  The government bailout in 2008, coupled with record-breaking profits and lucrative executive bonuses in 2009, has left the industry’s public image in shambles.  This horrendous reputation has potentially serious consequences for the future of the industry, as the public clamors for greater government oversight and corporate self-restraint.            

This intimate interplay between public reputation and political consequences is by no means new.  During the existence of the Second Bank of the United States (1816-1836), the bank (led by its second president Nicholas Biddle) and its adversaries (primarily President Andrew Jackson) engaged in a battle to define the public image of the institution.  While Biddle contended in his 1831 Report to the Stockholders that the bank’s operations were “of the highest benefit to the community” and “specially adapt[ed] . . . to the wants and interests of each section of the Union,” Jackson countered that the bank was “irresponsible” and held a “corrupting influence” over the populace.           

This political war among elites over the Second Bank of the United States is usually considered a well-known story, but there are key episodes that remain unexplored.  What is less understood is how the bank was viewed by various segments of the American public and how that public image influenced the political climate for destroying the bank. Nicholas Biddle attempted to craft an image of the bank as holding a sacred covenant with the American people to ensure the smooth operation of the economy. This paper will examine how middle- and working-class Americans interpreted this image, and how the inability to maintain the sacred trust of the people led to its ultimate destruction.