The First Bank of the United States (1791-1811)

The Bank of the United States received it’s charter in 1791, it charter was designed by Alexander Hamilton, who modeled it upon the Bank of England.

The Bank of the United States was a privately owned, for profit institution, that served to control the money supply by regulating the amount of notes the State Banks could issue, it also competed with the State Banks for deposit and loan customers. Something that did not go over well with the State Banks of the time.

The Bank's ownership was set by $10 million in capital, divided into 25,000 shares of voting stock with a par value of $400 each. About 80 percent of the stock was sold to the public with the remainder capitalized by the federal government. No individual could own more than 30 shares. However as much as 70% of the banks shares were owned by foreigners, and while they could not vote on the Banks operations at a 8.7% interest rate nearly $600,000 per year was being paid to foreign investors. The most troubling aspect of that payment was that it was made in gold and silver.

Secretary of State Thomas Jefferson believed the Bank was unconstitutional because, Congress possessed only those powers delegated by the constitution. He felt that the only possible source of authority in the constitution to charter the Bank was in the necessary and proper clause (Art. I, Sec. 8, Cl. 18).

Hamilton asserted, however, that Congress clearly had the power to tax, to borrow money, and to regulate interstate and foreign commerce. He argued that the necessary and proper clause gave Congress the power to enact any law which was necessary to execute its powers. And that a "necessary" law meant a law that was "needful, requisite, incidental, useful, or conducive to…."

Foreign ownership, constitutional questions, and a suspicion of banking in general led Congress to not renew the Bank's charter, and The First Bank of the United States, died in 1811.


Dunne, Gerald T., Monetary Decisions of the Supreme Court, New Brunswick, New Jersey: Rutgers University Press, 1960.
Symons, Edward L., Jr. and James J. White, Banking Law, 2nd edition, 1984.
Galbraith, John K., A Short History of Financial Euphoria, New York: Penguin Books, 1990.

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