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The national Bank would confer many benefits on the government including a ready source of loans, a principal depository for federal monies that were transferable from city to city without charge, and a clearing agent for payments on the national debt. The government, as the largest stockholder, would share in the profits, but have no direct participation in the management.
Bank Branches
In the fall of 1791 the new stockholders met in Philadelphia to choose board members and decide on rules and regulations. While the Bank would be headquartered in Philadelphia, the stockholders clamored for and received branches, with four opening in Baltimore, Boston, Charleston, and New York in 1792, and eventually four more in Norfolk (1800), Washington (1802), Savannah (1802) and New Orleans (1805). The branches were of great concern to the existing state banks, which viewed the national Bank as a competitive threat.
for its customers. The largest customer, the government, had many notable interactions with the Bank. One of the highlights of the relationship was the Bank's efficient managing of the government's fiscal affairs with respect to the Louisiana Purchase in 1803. In its earlier days, the Bank had lent heavily to its largest customer. By the end of 1795 the Bank had lent the government over $6 million, or 60% of its capital. At this point Willing and the other directors became alarmed and demanded the Government repay part of its loan. Since Government credit was still weak, the Treasury resorted to selling shares of its Bank stock. The sales began in 1796 and ended in 1802. With the proceeds from the sales of stock, the government repaid the Bank.
favor of renewing the charter and sent the bill to the floor of the House. Floor debate opened on April 13th, and the bill was stopped dead in its tracks. Stockholders resubmitted the bill on December 10th, and despite an intense three-month debate, the bill was killed. The vote in each section of the Congress was incredibly close. The bill was defeated in the House by a 65 to 64 margin on January 24, 1811, and in the Senate was deadlocked at 17 on February 20th before Vice-President Clinton, an enemy of both Madison and Gallatin, broke the tie with a negative vote. The Bank of the United States closed its doors on March 3, 1811.
Further Reading:
Bowling, Kenneth R. "The Bank Bill, the Capital City and President Washington." Capital Studies 1, no. 1 (1972). Cowen, David J. "The First Bank of the United States and the Securities Market Crash of 1792." Journal of Economic History 60, no. 4 (2000). Cowen, David J. _The Origins and Economic Impact of the First Bank of the United States, 1791-1797_. New York: Garland Publishing, 2000. Dewey, Davis Rich and John Thom Holdsworth. The First and Second Banks of the United States. Washington, D.C.: Government Printing Office, 1910. Hammond, Bray. Banks and Politics in America: From the Revolution to the Civil War. Princeton: Princeton University Press, 1957. Klubes, Benjamin. "The First Federal Congress and the First National Bank: A Case Study in Constitutional History." Journal of the Early American Republic10 (1990).
McDonald, Forrest. "The Constitution and Hamiltonian Capitalism." In How Capitalistic is the Constitution? Edited by Robert A. Goldwin and William A. Schambra. New York: American Enterprise Institute for Public Policy Research, 1982. Perkins, Edwin. American Public Finance and Financial Services 1700-1815 Columbus: Ohio State University Press, 1994. Redlich, Fritz. The Molding of American Banking. New York: Johnson Reprint Corporation, 1968. St. Clair Clarke, M. and D. A. Hall. Legislative and Documentary History of the Bank of United States. Washington, D.C.: Gales and Seaton, 1832. Reprint. New York: Augustus M. Kelley Publishers, 1967. Sylla, Richard. "U.S. Securities Markets and the Banking System, 1790-1840." Federal Reserve Bank of St. Louis Review 80, no. 3 (1998). Syrett, Harold, editor. The Papers of Alexander Hamilton. New York: Columbia University Press, 1961-87. Wettereau, James O. "Branches of the First Bank of the United States." Journal of Economic History 2 (1942). Wettereau, James O. "New Light on the First Bank of the United States." Pennsylvania Magazine of History and Biography 61 (1937). Wettereau, James O. Statistical Records of the First Bank of the United States. New York: Garland Publishing, 1985. Wettereau, James O. "The Oldest Bank Building in the United States." Transactions of the American Philosophical Society 43, part 1, 1953. Wright, Robert. Origins of Commercial Banking in America, 1750-1800. Lanham, MD: Rowman & Littlefield, 2001. Wright, Robert. The Wealth of Nations Rediscovered: Integration and Expansion of the U.S. Financial Sector, 1780-1850. New York: Cambridge University Press, 2002. Wright, Robert. "Thomas Willing (1731-1821): Philadelphia Financier and Forgotten Founding Father." Pennsylvania History, Fall, 1996.