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Published online by Cambridge University Press: 24 July 2012
In the early days of the Republic, opposition to a national bank derived from fear, ignorance, and a basic cleavage of prophecy. To many persons banks were synonymous with speculation; others viewed them as “aristocratic engines” designed to advance the interests of the few over those of the many. Most important, however, was the discrepancy of viewpoints between those who envisaged an agricultural nation and those who already sensed the embryonic stirrings of a vast industrial economy. To the htter, a strong central bank seemed indispensable. The struggle to establish the First Bank of the United States emphasized the rural-urban cleavage that was to influence much nineteenth-century history. It was also a conspicuous early recourse to implied Constitutional powers, anathema to States' Rights defenders and a great hope of businessmen in a still feeble nation.
1 For the complete text of Hamilton's message see Lodge, Henry Cabot (ed.), The Works of Alexander Hamilton (New York, 1904), III, 338–43.Google Scholar This was not the first such plan that Hamilton had drafted. In 1784 he drew up the constitution and petition for a state charter for the Bank of New York and ultimately sat on that bank's board of directors. Ibid., IX, 396–98; Schachner, Nathan, Alexander Hamilton (New York, 1946), 182.Google Scholar
2 Hamilton to Robert Morris (April 30, 1781), Works, III, 363–64.
3 Clapham, John, The Bank of England 1694–1797 (Cambridge, 1944), 10–13, 29–33.Google Scholar
4 Clark, G. N., The Later Stuarts 1660–1714 (London, 1934), 170–71.Google Scholar
5 Hamilton, Henry, England (New York, 1948), 223.Google Scholar
6 Smollett, Tobias, The History of England From the Revolution To The Death of George The Second (London, 1804), IX, 217–18.Google Scholar
7 Ibid., 217.
8 Clapham, The Bank of England, 18. The English were very impressed with the success that the Dutch had had with banking systems.
9 Hamilton, England, 223.
10 Randall, Henry John, The Creative Centuries (London, 1947), 335.Google Scholar
11 The bank's charter is outlined in Ford, W. C. (ed.), The Journals of the Continental Congress (Washington, 1934), XX, 545–46.Google Scholar The best discussion of the bank's trials and troubles is found in Jensen, Merrill, The New Nation (New York, 1950), 227–33.Google Scholar
12 Wyatt, Walter, “Federal Banking Legislation,” Banking Studies (Baltimore, 1941), 39.Google Scholar
13 Jameson, J.Franklin, The American Revolution Considered As A Social Movement (Boston: Beacon Edition, 1956), 64.Google Scholar
14 Jensen, The New Nation, 229.
15 The bank was particularly important to many businessmen because of its services in rendering discounts and in making specie available. By virtue of the fact that it could control the amount of money out in loans in a given area the bank exerted a profound influence on agricultural prices. Bezanson, Anne, et al., Prices and Inflation During the American Revolution (Philadelphia, 1951), 260, 263, 301, 304.Google Scholar
16 Pennsylvania Gazette, March 3, 1784; cited in Jensen, The New Nation, 229.
17 Ibid.
18 Works, III, 415.
19 Ibid., 443.
20 Lodge listed this letter as one written to Robert Morris and dated it 1780. Recent scholarship has proved that it was actually written to Sullivan in 1779. Schachner, Alexander Hamilton, 97–101, 444, n46.
21 Worte, III, 332.
22 Ibid., 338–39.
23 Ibid., 360.
24 Ibid., 362.
25 Boyd, Julian P. (ed.), The Papers of Thomas Jefferson (Princeton, 1950), VI, 87–88.Google Scholar There is no indication that Jefferson actually received the letter but it was addressed to him and was obviously intended for him alone.
26 The Journal of William Maclay (New York, 1927), 345.
27 Clapham, The Bank of England, 81–89.
28 Journal, 357.
29 Ibid., 359.
30 Ibid., 360.
31 Ibid., 341.
32 Ibid., 358.
33 Annals of the Congress of the United States, First Congress, II, 1, 941.
34 Ibid.
35 Ibid., 1, 944–45; Hunt, Gaillard (ed.), The Writings of James Madison (New York, 1906), VI, 19–2.Google Scholar
36 Annals, II, 1, 945.
37 Ibid.
38 Ibid., 2,011.
39 Ibid., 1,946–48.
40 Farrand, Max (ed.), Records of the Federal Convention of 1787 (New Haven, 1911), II, 615Google Scholar; Brant, Irving, James Madison: Father of the Constitution 1787–1800 (New York, 1950), 149–50.Google Scholar On the doctrine of implied powers compare the Federalist 23, written by Hamilton, to the Federalist 44, written by Madison.
41 Annals, II, 1,953.
42 Ibid., 1,954.
43 Ibid., 1,956.
44 Ibid., 1,989.
45 Ihid., 1,963.
46 Ibid., 2,012.
47 Bowers, Claude, Jefferson and Hamilton: The Struggle for Democracy in America (New York, 1925), 76.Google Scholar
48 At the time of the establishment of the Bank of the United States in 1791, only one state bank existed in the South, the Bank of Maryland, chartered in 1790. When the Bank of the United States charter expired in 1811, state banks had been established in Virginia, North Carolina and Kentucky. Branches of the Bank of the United States were eventually established in Boston, New York, Baltimore, Norfolk, Charleston, Savannah, Washington and New Orleans. Hawk, Emory Q., Economic History of the South (New York, 1934).Google Scholar For in formation on the operations of the Bank's branch offices see Wettereau, J. O., “Branches of the First Bank of the United States,” Journal of Economic History, II (Dec., 1942), 66–100.CrossRefGoogle Scholar
49 Jefferson, Thomas, “Notes on the State of Virginia,” reprinted in Padover, Saul K. (ed.), The Complete Jefferson (New York, 1843), 679.Google Scholar Jefferson also believed that yellow fever and other diseases engendered and spread by the inadequate sanitation systems of the cities of his day would help insure the eventual triumph of rural America. See his letter to Benjamin Rush, Sept. 23, 1800, Works of Thomas Jefferson (Ford ed.), VII, 458. Late in life he still prided himself on his opposition to the bank bill but lamented that, like Cassandra, he had been a prophet without honor. He found himself responsible for twenty thousand dollars worth of notes as a result of having too much faith in a friend and told one correspondent that he would have to dispose of much of his land to meet the obligation. Yet, the excesses of the banks had not “cured our country of this mania.” See his letter to Thomas Leiper, May 31, 1823, ibid., X, 253.
50 James Madison, “Republican Distribution of Citizens,” National Gazette, March 5, 1792; reprinted in Works (Hunt ed.), VI, 97–98.
51 John Adams to John Taylor of Carolina, March 12, 1819, Adams, Charles Francis (ed.), The Works of John Adams (Boston, 1856), X, 375.Google Scholar
52 Fitzpatrick, J. C. (ed.), The Writings of George Washington (Washington, 1939), XXXI, 224.Google Scholar
53 Brant, James Madison, 330. Cf. Madison, James, “Detached Memoranda,” William and Mary Quarterly, III (Oct., 1946), 540–46.Google Scholar
54 Fisher Ames to Richards Minot; cited in Bowers, Jefferson and Hamilton, 78.
55 Brant, James Madison, 331.
56 Ford, P. L. (ed.), The Works of Thomas Jefferson (New York, 1895), V, 284–89.Google Scholar
57 Washington to Hamilton, Feb. 16, 1791, Writings of George Washington, XXXI, 216.
58 Works, III, 446. The italics are Hamilton's.
59 Mason, E. C., The Veto Power (Boston, 1890), 25.Google Scholar
60 United States Statutes at Large, I, 191 ff. Other requirements included forbidding any person subscribing for more than 30 shares in one day between July 1 and Oct. 1, 1791; forfeiture of stock if the subscriber was unable to meet one of his payments; officers who permitted loans in excess of $100,000 were personally fiable for the full amount; the bank could not purchase public debt certificates but it could sell them; stock subscription opened on the first Monday in July, 1791, whereas Hamilton had requested that sale begin in April, 1791.
61 Bassett, John Spencer, The Federalist System 1789–1800 (New York, 1900), 39–40.Google Scholar
62 Wettereau, J. O., “New Light on the First Bank of the United States,” Pennsylvania Magazine of History and Biography, XLI (July, 1937), 263–85.Google Scholar
63 Bassett, The Federalist System, 39–40. Coincidentally, the subscription to the Bank of England's stock had been equally rapid, the whole being taken in twelve days. Clapham, The Bank of England, 19.
