Andrew Jackson (1767-1845), the seventh President of the United States, was a military hero and a political firebrand whose legacy casts a long shadow over American finance. For investors, he isn't just a face on the $20 bill; he's the historical embodiment of a deep-seated skepticism toward centralized financial power. Nicknamed “Old Hickory” for his toughness, Jackson waged a famous political war against the Second Bank of the United States, an institution he viewed as a corrupt monopoly that benefited a wealthy elite at the expense of the common person. His actions and philosophy raise timeless questions about the nature of money, the role of central banks, and the dangers of both financial consolidation and unchecked credit expansion. For a value investor, Jackson’s story is a masterclass in questioning the status quo and understanding the political forces that can shape monetary systems.
At the heart of Jackson's presidency was his battle against the Second Bank of the United States (B.U.S.). Chartered by Congress but run as a private corporation, the B.U.S. was the nation's dominant financial institution, functioning much like a modern central bank. It held the federal government's deposits, regulated credit, and issued paper currency that served as the nation's de facto money supply. Jackson, however, saw the bank as a “monster” and a “hydra of corruption.” He believed it was:
The conflict came to a head in 1832 when Biddle and his political allies sought to renew the bank's charter four years ahead of schedule, hoping to force Jackson's hand before the presidential election. Jackson didn't blink. He responded with one of the most famous vetoes in American history, delivering a powerful message that resonates with populists and financial skeptics to this day. He declared that when laws “make the rich richer and the potent more powerful, the humble members of society—the farmers, mechanics, and laborers—who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government.” He successfully painted the bank as a tool of the aristocracy, won re-election in a landslide, and took it as a mandate to destroy the B.U.S.
Having vetoed the charter, Jackson went a step further by withdrawing all federal deposits from the B.U.S. and placing them in various state-chartered banks. These institutions, chosen for their loyalty to his administration, were derisively nicknamed “pet banks” by his opponents. Freed from the centralizing oversight of the B.U.S., these banks dramatically increased their lending, fueling a massive speculative bubble in western land. The boom, however, was unsustainable. Jackson himself became alarmed by the rampant speculation being fueled by paper money and issued the Specie Circular in 1836, which required payment for government land to be in gold and silver. This pricked the bubble. Credit dried up, land prices collapsed, and businesses failed, culminating in the Panic of 1837, a severe financial crisis that gripped the nation shortly after Jackson left office. This aftermath serves as a cautionary tale about the chaotic potential of a decentralized banking system and the unintended consequences of drastic policy shifts.
While historians debate the economic wisdom of his policies, Jackson's legacy offers several enduring insights for the modern investor, particularly those who follow the value investing creed.
Jackson's wariness of the B.U.S. mirrors the modern value investor's healthy skepticism of central banks like the Federal Reserve. His fight is a historical touchstone for those concerned about the power of unelected officials to control the money supply, create inflation, and potentially devalue savings. Great investors like Warren Buffett constantly emphasize the importance of protecting purchasing power, a goal that can be undermined by expansionary monetary policy.
Jackson was a fierce advocate for “hard money“—gold and silver—which he believed was the only honest form of currency. He distrusted banknotes not backed by specie, viewing them as instruments of speculation and fraud. This belief aligns with the concept of sound money, a principle dear to many value investors who prefer tangible assets and stable stores of value over the abstract promises of fiat currency. His success in paying off the entire national debt in 1835—an almost unimaginable feat today—was a direct result of this fiscally conservative, hard-money mindset.
At its core, Jackson's philosophy was rooted in a deep distrust of debt and financial engineering. He saw speculation as a threat to the economic health of the nation and the moral fiber of its citizens. This principle is the bedrock of value investing, which eschews get-rich-quick schemes in favor of patient, disciplined analysis and a focus on avoiding permanent loss of capital. Jackson’s story is a powerful reminder that booms built on easy credit and speculation often end in busts.