The charter of the Second Bank of the United States was for twenty years. Its capital was $35,000,000, of which amount the government subscribed $7,000,000, and in consideration of this five of the twenty-five directors were to be appointed by the President. The main bank was located in Philadelphia and branches were established in different states wherever two thousand shares or more of the bank's capital had been subscribed. The bank and its branches were to have the deposits of the national treasury, transact exchanges, negotiate loans and perform other similar duties for the treasury free of charge. The bank was allowed to issue notes in denominations of not less than $5 on the same terms as the first bank, that is to say, its aggregate note circulation must not exceed its capital stock. Its notes were given preference over all others by being receivable for all dues to the United States. These notes were payable on demand, and in the event of the bank failing to redeem its notes or suspending specie payment, it was required to pay interest at 12 per cent. on its notes. Congress pledged itself not to grant a charter to any other bank during the life of the charter to this. Thus it will be seen that the Second Bank of the United States was similar in its main features to the first. It was larger, its note issues would be greater, and to prevent the bane of irredeemable paper money, a penalty in the form of interest was imposed upon it. It began business on January 7,1817, and on the 20th of the folCharter of the Second United States Bank lowing February specie payments were resumed and the country was once more upon a sound financial basis.

In 1819 the question of the constitutionality of the bank's charter was definitely decided by the Supreme Court of the United States in the case of the State of Maryland vs. McCul-loch. The United States Bank had established a branch in Baltimore. The state of Maryland had enacted a law that all bank notes circulating within the state must be printed upon stamped paper for which a tax must be paid to the state. The branch did not use this paper and declined to pay the tax, whereupon the state brought suit for violation of the laws of Maryland against Cashier McCulloch as the officer of the bank. The contention was made that the branch bank was without warrant of authority under the laws of the United States, and that Congress had no power under the Constitution to create a bank. In passing upon this question the doctrine of implied powers was fully established. Since Congress has the power to lay and collect taxes, borrow money and regulate trade, it was decided that it had the power "to make all laws which shall be necessary and proper for carrying into execution the foregoing powers." In rendering the decision of the court in this important case Chief Justice Marshall said, "It is the unanimous and decided opinion of this court that the act to incorporate the Bank of the United States is a law made in pursuance of the Constitution. The branches, proceeding from the same stock, and being conducive to the complete accomplishment of the object, are equally constitutional," and hence the court declared that they were not subject to any state taxes or restrictions, since their usefulness might thereby be impaired or their existence even destroyed.

In 1819 a financial panic overspread the country. Banks and business houses failed in large numbers and general commercial distress and depression prevailed. It leaked out that irregularities had been practiced in the management of the Bank of the United States, and Congress ordered an investigation. A shameful state of affairs was unearthed and the bank was found to be on the verge of ruin. The officials seemed to have been imbued with state banking fallacies and had paid little attention to the restrictions of their charter. They had discounted the notes of stockholders on the pledge of their stock as security to the amount of over $8,000,000. They had also allowed stock to be sold and transferred before it was fully paid for. They even advanced more than the par value of the stock in some instances. Among the requirements of the charter was one that there should be no dividends paid on shares that were not fully paid. This provision had been repeatedly violated. The president and cashier of the Baltimore branch had helped themselves to large amounts of money on scant security, and withal the bank was well nigh insolvent. It was saved from complete failure by its new president, who borrowed $2,500,000 in Europe, and took heroic measures to make stockholders pay up. From this experience in our banking history we learned the lesson that a bank should not loan money on its own shares, much less those which are not even paid up, for in order to realize on the security it must impair its own capital. Such loans when in default become equivalent to the purchase of a bank's own stock and that is the same as partial liquidation. In a time of stringency such a practice will almost surely put a bank in jeopardy. The Bank of the United States got itself into this predicament in the panic of 1819, and had it not been for the loan secured in Europe and the treasury balance on deposit there, it would have been forced to close its doors.

Under proper management the bank gradually regained its wonted strength, and thereafter controlled the financial system of the country, rendering valuable service in its capacity as "Regulator of the Currency," and as the fiscal agent of the government. The people as a whole regarded the institution as their deliverer from the evils of a debased money system, and, with the exception of a few disgruntled borrowers, together with stockholders whom the bank compelled to pay up, and the state banks who had been forced to redeem their notes, it appeared to be solid in the confidence and good will of the people. Imagine, then, the general surprise when in 1829, General Jackson in his message attacked the bank, and declared that it had "failed in the great end of establishing a uniform and sound currency." People who knew anything about the matter must have known that this statement was false, and yet so great was the popularity of the old hero that many were willing to accept anything he said. General Jackson's opposition to the bank could not have been caused by financial reasons. He was no doubt led to believe that the bank had been hostile to his election and he proposed to destroy the "monster." President Biddle of the bank declined to allow political affairs to influence or in any way meddle with the management of the concern, and intimated that he needed no advice from the White House. All of this aroused President Jackson's ire and he became convinced that the bank was a giant monopoly dangerous to the welfare of the government and people, and that it was his duty to destroy it.