United States Banks
( Originally Published Early 1900's )
The first United States bank was established by Act of Congress, approved July 25, 1791. It was organized at Philadelphia, with a capital of §10,000,000, divided into 25,000 shares of $400 each. The act prescribed that any person, copartnership, or body politic might subscribe for any number of shares not exceeding 1,000 — only the United States could sub-scribe for more than this number of shares; that with the exception of the United States the subscriptions should be payable one fourth in gold and silver, and the remaining three fourths in certain six per cent. bonds of the United States; that the subscribers should be incorporated under the name of "The President, Directors, and Company of the Bank of the United States," and the organization should continue until March 4, 1811; that the bank could hold property of all kinds, inclusive of its capital, to the amount of 15,000,000; that twenty-five directors should be chosen, who in turn should choose from their number a President; that as soon as 400,000 in gold and silver was received on subscription, the bank could organize, after giving a notice of its intention. The general effect of this institution was very salutary. The credit of the United States became firmly established. The bank notes stood at par with gold and silver. The large deposits made the money available for the use of the Treasury, and the State bank currency, which had flooded the country with no prospects of redemption, was greatly reduced. But with all its recognized advantages, the act to recharter was defeated in 1811 by the casting vote of the Vice-President, George Clinton. Its loss, however, was immediately felt in the sudden and rapid increase of the currency of the State banks. To ward off an impending crisis, a second bank was established by an act approved by President Madison, April 10, 1816, at Philadelphia. A capital of $35,000,000 was required, which was to be equally divided into 350,000 shares, of which the United States took 70,000. The charter extended to March 3, 1836. The bank was prohibited from lending, on account of the United States, more than $500,000, or to any prince or foreign power any sum whatever, without the sanction of law first obtained; and it was also prohibited from issuing bills of less denomination than $5. In time, to facilitate business, branch offices were established in every state. In December, 1829, however, the bank met strenuous opposition in the message of President Jackson, who argued, as did Jefferson when the first bank was started, against the constitutionality of its charter; and when Congress, in 1832, passed a bill to recharter the institution he imposed his veto, and soon after removed from the bank the United States deposits. The bank corporation, however, continued to exist until 1836, when the charter terminated.