Mistrustful of banks and paper money and relatively financially uneducated, President Andrew Jackson left an intriguing financial legacy. Jackson is infamous for vetoing the re-charter of the Second Bank of the United States, a federally chartered central bank, and then prematurely removing the government’s funds from it, also known as his “Bank War.” He is also known for extinguishing the national debt in 1835, the only US President ever to do so.
Believing that the praise he received for the elimination of the debt and his re-election in 1833 were signs of support for his financial policies, Jackson ordered the premature removal of the government’s deposits from the Bank in an attempt to kill it outright. He appointed a Treasury Secretary who removed and then deposited the reserves in various state banks thought loyal to his administration. However, Jackson’s victory over the Bank is considered questionable because this and other policies, such as the Coinage Act of 1834 and the Specie Circular of 1836, ultimately destabilized the financial system and economy, rendering them susceptible to shocks. When the US suffered a banking panic in 1837, the economy slipped into a severe depression that lasted until 1844. The resulting decline in government revenues ironically led to deficits that necessitated the rebirth of the national debt.