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In 1837, the bank failed to renew its charter after Nicholas Biddle, the bank’s president, clashed with Andrew Jackson’s administration thereby leading to the liquidation of the bank in 1838 (Wilentz, 2008).
Although proponents of the abolition of the Second Bank of the United States argued that the bank was responsible for inflation and was only improving the fortunes of an elite few, it played a number of critical roles with the primary responsibility being the main fiscal agent for the federal government thereby assisting in the stabilization of the economy and property values. For example, being the exclusive fiscal agent of the Federal government, BUS assumed a number of important economic roles some of which included holding and transferring all the U.S payments, deposits and receipts of nearly every government transaction as well as processing of tax payments. In this regard, the BUS was the exclusive depository of the Federal government, a role which made it the principal customer and stockholder. As a result, the abolition of the Second Bank of the United States in 1836 resulted in a diverse number of economic consequences some of which included inflation, increased national debt, unemployment among other. This paper critically analyzes the various economic consequences of the abolition of the Second Bank of the United States in 1836.
One of the immediate economic impacts of the shutdown of the second Bank of the United States was the loss of savings and investments. This was particularly attributed to the fact that the bank maintained the exchequer account where the federal government deposited its revenue for use by its agencies. Dowd, K, Hutchinson, M. (2010, 70) suggests that the Second Bank of the United States acted as the federal government banker. More importantly, the bank managed the accounts for departments and government ministries as well as Individual investors held both saving and liquid accounts. These accounts held a large
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