“Alas! had the ancients, who so much surpass us
In their pure golden age, fixed a bank on Parnassus,
What a model of wisdom and pleasure to follow!
Only think now — to sign one’s bank-notes like Apollo!”

* * *

That quatrain, a whoop of central banking joy, was penned in the 1820s by Nicholas Biddle, who was president of the Second Bank of the United States. Born into a leading family of Philadelphia, he was a literary type who married into an estate, at Andalusia, that was (and is) one of the most beautiful homes in the world. When he headed the Second Bank, it was the largest corporation in the country, if not the world. But our country’s second attempt at a central bank was liquidated after Biddle lost an epic battle with Andrew Jackson.

Human Events newspaper has just put up a column suggesting that the story of Nicholas Biddle holds a cautionary note for our time. The writer of the piece, Jarrett Stepman, wonders whether Chairman Bernanke’s third quantitative easing was designed to shore up President Obama on the eve of the election. He suggests increasing numbers of Americans “see the Federal Reserve as an institution with too much power, too little oversight” and “far from being removed from politics as the Fed was originally intended to be.”

That was Biddle’s biggest mistake. He had become president of the Second Bank in 1823, shortly after the bank’s constitutionality was upheld by the Supreme Court in McCulloch v. Maryland, which said that a state couldn’t tax the notes of the bank. That was the case in which Chief Justice Marshall remarked that “the power to tax involves the power to destroy.” Biddle proved to be a competent central banker, repairing the bank’s reputation, which had been damaged by previous bank presidents. He favored notes from banks prepared to redeem them in gold or silver.

Jackson, however, resented his power and was determined to diffuse it among state chartered banks. The matter came to a head over the renewal of the Second Bank’s federal charter. Biddle went to the Congress four years early and got the vote he wanted, with the help of Senators Clay and Calhoun. He badly underestimated Jackson, who was known as “Old Hickory” and who turned around and vetoed the re-charter. He issued a famous veto message, warning that Congress lacked authority to delegate its powers to a central bank.

So angry was Biddle at being vetoed by Jackson that he tightened credit, proclaiming his hope to bring pressure on the president and the Congress. Jackson responded by taking the government’s deposits away from the Second Bank of the United States. Jackson had to oust two recalcitrant treasury secretaries and bring in Roger Taney on a recess appointment to accomplish what he wanted. So outraged was the Senate that it passed against Jackson the only censure it ever voted against a president.

Delegation after delegation came to Jackson pleading for him to back off, but Old Hickory wouldn’t do it, saying he’d resign the presidency first. “The Israelites during the absence of Moses to the mount made a golden calf and fell down and worshipped it, and they sorely suffered for their idolatry,” historian Bray Hammond quotes him as railing to one group of visitors. “The people of this country may yet be punished for their idolatry.”

The end of the line for Biddle came in the by-election of 1834, when the states decided to revoke from the anti-Jackson forces control of the Senate. Shortly after the new Senate gathered, its journal was brought in, and in front of the full body its secretary drew a black line through the censure of Jackson and said the resolution was expunged. At the Second Bank’s last board meeting, Biddle was presented with a $30,000 set of dinnerware. Jackson retired with a farewell address on how gold and silver were the constitutional money.

* * *

Today our politics are still consumed with the questions from the war over the Second Bank. In some ways Mr. Bernanke and Biddle are the opposite. Biddle tightened credit, Mr. Bernanke loosened it. Biddle fought a president and the states. The beef with Mr. Bernanke is coming from Congress, which is now looking at auditing the Fed. Mr. Stepman reckons the common denominator between Mr. Bernanke and Biddle is a lack of restraint and the appearance of politicking. We want for a president today like Jackson, who believed in gold and silver, and no one would call Mr. Romney “Old Hickory.” But it turns out there is a new quatrain:

“Alas! have the moderns who so much trespass us
In their pure fiat age, freed the Fed to harass us,
Whither went Hope in a time gone so cranky
Amid a flood of Reserve notes from Chairman Bernanke?