Rethinking the Jacksonian economy: The impact of the 1832 bank veto on commercial banking

Revisiting an old debate between "traditional" historians and "New" economic historians about the short-run monetary effects of President Jackson's war on the Second Bank, I offer new arguments for the traditionalists. I develop a framework accounting for growth in commercial bank credit based on the "investment club" characteristics of antebellum state-chartered banking and apply it to state bank balance sheet data for 1830-1836. The removal of the Second Bank indeed magnified the boom in commercial banking, and the replacement of Second Bank branches with state-chartered banks as lenders and federal government depositories amplified the boom in frontier lands and state debt.