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In January 1835 the United States paid off its national debt entirely, a result of Andrew Jackson’s campaign against the Second Bank of the United States. Jackson’s hostility traced to the Panic of 1819, when the bank, after encouraging state banks to flood the West with paper notes, abruptly demanded gold and silver and set off failures and foreclosures that hit farmers and laborers hardest. The 1824 election, decided in the House after Henry Clay backed John Quincy Adams and became secretary of state, deepened his view that elites ran the system. As president he faced bank president Nicholas Biddle, a Princeton graduate at 15 who held that no government officer had a right to meddle with the bank.

In 1832 Clay and Daniel Webster pushed an early recharter to trap Jackson in an election year. Jackson vetoed it, ignored McCulloch v. Maryland, and recast the veto as a policy weapon, then won reelection in a landslide. To remove federal deposits he moved Treasury Secretary Louis McLane to the State Department, removed William J. Duane, and had Roger Taney shift funds to state pet banks. Biddle answered by restricting credit to cause a recession, which turned business opinion against him. Without the bank’s restraint, pet banks fueled a land bubble, Jackson’s 1836 Specie Circular burst it, and the Panic of 1837 followed.

• Under Biddle, the bank kept state banks in check by collecting their notes and demanding gold for them.
• Opponents labeled the president King Andrew I after the veto.
• Jackson told business delegations seeking relief to go to Nicholas Biddle, who had all the money.
• The bank became a Pennsylvania state bank and later went bankrupt amid fraud allegations.
• The country went without a central bank until the Federal Reserve was created in 1913.