“The government was in a state of impotence produced by conceptions of its duties which had become firmly established in Andrew Jackson's day, which had come to be taken for granted, and which now could not be dismissed instantly from most men's minds, as it could from Thaddeus Stevens'. In the intervening years, the Union had deferred to its component states time after time; and members of Congress, though legislators for the Union, seldom put second their sentimental and practical loyalties to the sovereign states of which some were ambassadors and to the local interests of which some were representatives. They remembered who elected them. They shrank from sending armies of federal tax-gatherers to violate state sovereignties; and while they cursed the rebels, swore to punish them, and voted for taxes, they chose measures that put off the dreaded break with the dear and happy past. They were not ready to do what was necessary to enlarge federal powers and reduce those of the states, except those states that sought to preserve slavery and leave the Union. They had grown up taught and believing that the federal government was the best in the world because it interfered with them so little. The Union had accepted faithfully and modestly the Jacksonian dictum, "the world is governed too much." And now it had to gird itself to restrain the intransigence of South Carolina and her sisters, without offending Kentucky, Ohio, New York, and others loyal to the Union.”

To continue, here is Hammond in his massive tome, Banks and Politics in America from the Revolution to the Civil War (excerpts from pages 719 to 722):

“Congress had been loud during a generation of debates on slavery and states9 rights; but otherwise the federal government had withdrawn into the modest performance of minor routines. It had turned virtuously away from the policies of Alexander Hamilton and neglected even the humane projects of Thomas Jefferson and Albert Gallatin. It had hesitated to assume responsibility for the Smithsonian Institution. Steamships had been crossing the ocean for thirty
years and navigating rivers and lakes, but the little American Navy was still largely under sail and very beautiful to look at. It had less than 10,000 officers and men. The Army had less than 20,000, which was about enough to watch the Indians.

“If this were all it might not have been bad, because it might reflect the pacific instincts of a noble people. What it reflected rather was pusillanimity. Departmental organization was antediluvian; the civil service belonged to the politicians; and the business administration of the government's affairs might as well have been direct,,~ from Kamchatka so little was it influenced by the energy, adaptability, and efficiency of the economic world around it. This was nowhere more conspicuous than in the fiscal and monetary responsibilities of the government, which were trailing so far behind the progressive world outdoors that they had barely braved the turn from the 18th century into the 19th made by the rest of creation sixty years before. One result of this, and perhaps the one most appalling, was that when Mr. Lincoln entered office in March 1861, confronted by the worst exigency, material as well as spiritual, in the country's experience -- an exigency requiring ships, guns, men, food, and all the needs of an immense physical effort – his Treasury was empty.

II
“It was this rudimentary state of federal powers that prolonged the war. The South's advantages were the North's unreadiness and inability to pull itself together, the decisiveness and energy of the southern leadership at the outset, and the military genius of General Robert E. Lee and his associates. Only one of these advantages was lasting. The advantages of the North were all lasting. She had the population, the wealth, the resources, the commerce, the equipment, the diversified productivity, and the diversified skills. If thewar were prolonged, she was bound to win. But the condition of the government was such when Mr Lincoln became President that she could win only if it were prolonged.

SNIP

“In only a matter of months, the war already had outlasted all expectation, the number of seceded states had increased from seven to eleven and disunion was menacing in three or four others; arsenals, Navy yards, custom houses, mints, ships, arms, and men had gone with secession. Fort Sumter had been given up, and the first battle of Bull Run had been lost. By December, when Congress met again, it was plain that far more money than had been supposed was going to be needed, and that more effectual means of getting it must be found. Harsh necessity required that the government and the economy be reunited; the happy divorce they had long enjoyed must end. The first step sadly taken toward this reunion was the stoppage of specie payments by the banks and the Treasury at the close of the year. Secretary Chase, instead of learning with surprise of the banks' suspension and then complaining ignorantly about it as his predecessor in President Van Buren's Cabinet had done in 1837, resignedly concurred in its inevitability. I

“The reform that was needed was both constitutional and practical. It must entail the undoing of two Jacksonian triumphs. Not only was the federal government obstructed, under the Jacksonian legacy, from exercising an essential function-it was forbidden to act normally and to its own advantage as a transactor in the economy. No meeting ground between a government and its people is of more vital importance than that of monetary payments; yet the federal government was denied the use of the money the people used. Any business corporation or individual could borrow at banks, but the government could not. Even in a time of terrible need, the Treasury was forbidden to touch the common means of payment, either as borrower, as payor, or as payee. It might have been confined, with less serious results, to ox carts for conveyance, to quill pens, and to candle light.

“This practical fencing-in was rendered suddenly intolerable by the war, which was also intensifying the anomaly of the federal government's impaired control over the monetary system. In terms of .the Constitution and of common sense, control of the monetary system irrefragably belonged to sovereignty and if there were any reason at all for federal union, no single one was more basic than that it was needed in order that it might supply the economy a uniform circulating medium.”

Echoes of what we face today! The idea that the world is governed too much has been pushed much too far (largely because of the financial oligarchy you discuss in the OP); deregulation has played no small part in creating the conditions of financial calamity in which we now find our nation. In fact, we must now deal with a population a full third of whom are openly hostile to the concept of “general welfare” embedded in the Constitution. The problem with consigning Biddle to the ranks of the evil financial oligarchy arises because there are different interpretations and beliefs of the best way to promote the general welfare. In his struggle with Jackson, was Biddle fighting for the Hamiltonian vision of spurring America to industrial and commercial greatness? Or was he serving only the narrow, selfish interests of himself and a coterie of fellow financiers? And what of Jackson? Was he driven entirely by his ideological aversion to powerful banks, or were his motives and intentions less than pure? I have before me the 1967 reprint of Thomas F. Gordon’s 1834 polemic, The War on the Bank of the United States which explains in part how Jackson supporters would profit handsomely from the termination of the Bank. The parallels with today should be obvious: look at the rich vein of material that Thomas Frank had to work with in his book The wrecking crew: how conservatives rule‎ which explores the interplay between wrong-wing “free market” economic ideology, and the rapacious self-enrichment of Bush’s “have-mores.” In other words, what if Biddle were actually the Brooksley Born of his day, trying to salvage what he could of Hamilton’s scheme for national banking and a national currency?

I really cannot say with final certainty. I started looking at Lincoln’s Greenbacks as a possible map for where we have to go today, but found that almost all the material on the subject had been written by von Hayekian Austrian whack-jobs. When I came upon Hammond, it seemed to me I finally had found someone who understood that the principal objective of national fiscal, monetary, and economic policies should be to build the nation. Thus, in the end, we come down to what has all along been my special pet peeve about the economics profession today: policies and actions must be judged by the unapologetic moral test of nation building.