The Pet Banks in Jacksonian Politics and Finance, 1833–1841

In September 1833, Andrew Jackson issued an executive order ending deposit of Federal funds in the Bank of the United States, which had been the government depository since 1817. The culmination of Jackson's long struggle with the Bank and its friends in Congress, this measure closed a chapter in the political history of the era. To the conservative Jacksonians, “victory over the Bank of the United States was a consummation” that freed the state banks and business enterprise from the control of a powerful and despised institution. To the radical, hard-money faction of the Democratic party, however, “removal of the deposits” (as the order was popularly termed) was merely a first step toward more fundamental reform—elimination of the monetary disturbances that they attributed to reliance on bank paper for the currency of the country. Because of this divergence of views, partisan and factional disputes over Jacksonian financial policy did not cease with victory over the Bank. Central to the continuing debate was the relationship of die Treasury Department to the group of state-chartered banks, usually called the “pet banks,” in which Federal funds were deposited after September 1833. My purpose here is to review Treasury operations in die period 1833–1841, to suggest the political role of die pet banks and the economic impact of financial policy in die administrations of Jackson and Van Buren.