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Biddle, Nicholas

BIDDLE, NICHOLAS

Nicholas Biddle (17861844) established the Bank of the United States as a prototype of the modern central banking system. Using the power of the bank to expand and contract the money supply, Biddle played a prominent role in creating a stable currency and in bringing order to the chaotic American marketplace. A true American aristocrat, he read classics in their original language and collected art. Following his retirement from banking, he helped establish Girard College in Philadelphia and held literary salons at Andalusia, his country estate.

Biddle was born in Philadelphia, the son of Charles Biddle and Hannah Shepard. Biddle's mother was the daughter of a North Carolina merchant; his father was a successful merchant. Biddle was a precocious student and was admitted to the University of Pennsylvania when he was ten years old. His parents took a keen interest in his education. At age thirteen they had him transferred to Princeton University as a sophomore. He graduated in September 1801. At the age of fifteen, Biddle was the highest ranking student in his class.

In 1804 Biddle went to France as a member of the American legation, where he worked on claims resulting from the Louisiana Purchase. After one year, he took a tour of Europe and Greece, then settled in London where he worked for two years as secretary for future President James Monroe (18171875). During the time he spent overseas, Biddle acquired valuable insights into the problems and techniques of international finance.

In 1810 Biddle met and later married Jane Craig, whose father's estate was one of the largest in Philadelphia. That same year he was elected to the Pennsylvania legislature. The highlight of his term was an eloquent defense of the First Bank of the United States.

In 1822 Biddle assumed the presidency of the Second Bank of the United Statesthe first effective central bank in U.S. history. The bank carried out regular commercial functions, and also acted as a collecting and disbursing agent for the federal government. Under Biddle's guidance, the bank expanded to twenty-nine branches and controlled one-fifth of the country's loans and bank notes in circulation.

Biddle was a brilliant administrator who maintained complete control over the Bank of the United States. His political instincts, however, were less astute: He believed that any reasonable person must agree with him on the value of the bank to the nation's economy. His hardheaded convictions proved disastrous for the bank.

By 1828 the central bank was under attack from President Andrew Jackson (18291837) whose personal experience had given him a deep mistrust of financial institutions. Uncertain of the bank's future, Biddle decided to press for re-chartering the bank in 1832, four years before the bank's original charter required the action. Jackson vetoed the move, publicly denouncing the bank as a monopoly that was under foreign influence. Though the reputation of the bank had improved under Biddle's leadership, public opinion favored Jackson's position.

Bolstered by his supporters, Jackson resolved to destroy the bank. He directed the removal of almost $10 million in government deposits, which were placed in state or "pet banks." Biddle responded by curtailing loans. Though the move may have been necessary to protect the bank, the restriction of credit dealt a serious blow to the US economy. Bankruptcies multiplied while wages and prices declined. These hardships turned people against the bank.

The bank's federal charter was terminated in 1836, but it was granted a state charter to operate as the Bank of the United States of Pennsylvania. The frenzied speculation that followed the loss of stability that the central bank had provided the Panic of 1837. Biddle, however, was still the most prominent banker in the country. As President of the Bank of the United States of Pennsylvania, Biddle played an important role in trying to shore up the nation's banking system. He also intervened heavily in the cotton market to prevent its collapse.

With order seemingly restored, Biddle resigned his position in March 1839. The bank continued to operate, but due to falling cotton prices and mismanagement by the bank's directors, its plight grew steadily worse. The bank collapsed in February 1841, taking Biddle's personal fortune with it. During his final years, Biddle faced many lawsuits. Although arrested on charges of criminal conspiracy in 1842, he was exonerated. Legal problems continued to pursue him until his death in 1844.

See also: Bank of the United States (First National Bank), Bank of the United States (Second National Bank), Bank War, Central Bank, Andrew Jackson, Panic of 1837

FURTHER READING

Govan, Thomas Payne. Nicholas Biddle: Nationalist and Public Banker, 17861844. Chicago: University of Chicago Press, 1959.

Hammond, Bray. Banks and Politics in America from the Revolution to the Civil War. Princeton, New Jersey: Princeton University Press, 1957.

McFaul, John M. The Politics of Jacksonian Finance. Ithaca, New York: W.W. Norton and Co., 1968.

Temin, Peter. The Jacksonian Economy. New York: W.W. Norton and Co., 1969.

Weisberger, Bernard A. "The bank war." American Heritage, JulyAugust 1997.

Wilburn, Jean Alexander. Biddle's Bank: The Crucial Years. New York: Columbia University Press, 1967.

using the power of the bank to expand and contract the money supply, biddle played a prominent role in creating a stable currency and in bringing order to the chaotic american marketplace.

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Nicholas Biddle

Nicholas Biddle

Nicholas Biddle (1786-1844) was president of the Second Bank of the United States from 1823 to 1836. He was an early advocate of the debated principle of central banking, and under his direction the Bank performed most of the functions of present-day central banks.

Nicholas Biddle was born into a prominent Philadelphia family on Jan. 8, 1786. He attended the University of Pennsylvania and graduated from the College of New Jersey at Princeton in 1801. He began the study of law, but, too young to enter practice, he lived in Europe from 1804 to 1807, first as secretary to John Armstrong, the U.S. minister to Napoleonic France, then as a traveler, and finally as a secretary to James Monroe, the U.S. minister in England.

Biddle then began practicing law but soon became dissatisfied. Between 1810 and 1823 he was the managing trustee of his wife's estate, one of the largest in Philadelphia; prepared the journals of the Lewis and Clark expedition for publication in 1814; edited (1812-1814) the Portfolio, a Philadelphia literary magazine; served in the lower house and senate of the Pennsylvania Legislature; prepared (1818) a digest of the Commercial Regulations of Foreign Countries with Which the United States Have Commercial Intercourse for the Department of State; and from January 1819 through 1821 was one of the five government directors of the Second Bank of the United States.

In January 1823 Biddle was elected president of the Bank—a mixed public and private institution—being acceptable to the government and the shareholders alike but serving as a director by presidential appointment. Under Biddle's administration the Bank, centered in Philadelphia with branches in the leading American commercial cities, performed a useful function for all economic interests and groups through facilitating the exchange of goods and payments in this predominantly commercial society. The currency supplied by the Bank, no matter where made payable, was received in most places at par, sometimes commanded a premium, and was never at a discount of more than 1/4 of 1 percent. Notes issued by local state banks circulated at par in the immediate vicinity of their issue, and this mixed national currency was elastic, uniform, sound, and completely adequate for the needs of the expanding economy. The developing transportation system, which united the vast geographical areas of the United States and connected them with Europe, was paralleled by a system of domestic and foreign exchange that facilitated payments and increased the profits of trade.

The American people as a whole seemed satisfied with the currency and credit system and the operations of the national bank, but President Andrew Jackson, who distrusted all banks, charged that the Second Bank of the United States was unconstitutional and that if its power was not checked it would enable a financial oligarchy to dominate the nation. Jackson began an assault upon the Bank in 1829, but many of the members of his party (the Democrats) in Congress did not agree. The Bank, in their opinion, was a useful and necessary arm of the Treasury, and they, in alliance with most of the opposition party (the National Republicans) rechartered the institution in 1832. President Jackson, angered by this defiance of his expressed will, vetoed the rechartering bill and in the fall of 1833 removed the government deposits from the Bank's custody.

Biddle refused to accept defeat. A successor bank, the United States Bank of Pennsylvania, was organized in 1836, and when the Panic of 1837—in part a product of Jackson's financial policies—struck the nation, Biddle almost single-handedly restored national prosperity within a year. He resigned from the Bank in April 1839, believing it and the nation safe and secure. But shortly afterward the Bank of England, itself in danger, renewed financial pressure on the United States, and 2 years later the United States Bank closed its doors.

This costly failure not only discredited Biddle but also the principle of central banking, and it was not until the early years of the 20th century that the United States, through the creation of the Federal Reserve Banks (1912), once more returned to the system that had provided the national economy with a uniform, sound, and elastic currency. Biddle, completely disgraced, died on Feb. 27, 1844, and the general verdict on him and his career was stated by William Cullen Bryant, a Jacksonian editor and poet, who reported that Biddle had died "at his country seat, where he had passed the last of his days in elegant retirement, which, if justice had taken place, would have been spent in the penitentiary."

Further Reading

The only biography of Nicholas Biddle is Thomas P. Govan, Nicholas Biddle: Nationalist and Public Banker (1959). Biddle's work as a banker has been extensively treated in Ralph C. H. Catterall, The Second Bank of the United States (1903); Fritz Redlich, The Molding of American Banking: Men and Ideas (2 vols., 1947-1951); Walter B. Smith, Economic Aspects of the Second Bank of the United States (1953); and Bray Hammond, Banks and Politics in America from the Revolution to the Civil War (1957). An unfavorable view of Biddle is in Arthur M. Schlesinger, Jr., The Age of Jackson (1945). □

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Biddle, Nicholas (American financier)

Nicholas Biddle, 1786–1844, American financier, b. Philadelphia. After holding important posts in the American legations in France and England, he returned to the United States in 1807 and became one of the leading lights of Port-Folio, a literary magazine, which he edited after 1812. He was also commissioned to write the history of the Lewis and Clark expedition, but turned over the job to Paul Allen, a Philadelphia journalist, when he was elected (1810) to the state house of representatives, where he served a single term. In 1819, President Monroe appointed him one of the government directors of the Bank of the United States. He became its president in 1823, and his administration illustrated his belief in the necessity of a central banking institution to stabilize the currency and curb the inflationary tendencies of the era. He became the leading target of the Jacksonians in their war against the bank. After the bank failed of recharter, Biddle operated it as a private bank until it collapsed (1841) as an aftermath of the Panic of 1837. He was charged with fraud but was subsequently acquitted. Biddle's public correspondence dealing with national affairs (1817–44) was edited by Reginald McGrane (1919).

See biography by T. P. Govan (1959); study by G. R. Taylor (1949); B. Hammond, Banks and Politics in America (1957, repr. 1967); R. V. Remini, Andrew Jackson and the Bank War (1967).

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Biddle, Nicholas (American naval officer)

Nicholas Biddle, 1750–78, American naval officer, b. Philadelphia. Biddle left the British navy in 1773. In the American Revolution he became captain in the patriot navy and daringly raided British shipping off the American coast. After receiving command (1777) of the ship Randolph, Biddle was killed and his ship destroyed in an encounter (1778) with the British warship Yarmouth off the coast of Barbados.

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