February 25, 1791–January 24, 1811
The First Bank of the United States (1791–1811) was a signficant part of Alexander Hamilton’s Financial Plan and helped stabilize the nation’s economy for 20 years.
First Bank of the United States Summary
The First Bank of the United States was a bank with government oversight and a key part of Alexander Hamilton’s Financial Plan. Following the American Revolutionary War, the Federal Government and the states were deep in debt. As the first Secretary of the Treasury, Alexander Hamilton devised a plan to stabilize the financial system in the United States. A key part of his plan was the establishment of a national bank that would collect taxes, hold government funds, and make loans to the government and borrowers. The First National Bank proposal faced opposition on both practical and constitutional grounds — especially from Thomas Jefferson — but Hamilton argued that it was necessary for the nation’s financial well-being. Congress ultimately passed a bill creating the bank for a term of 20 years, which was signed into law by President George Washington. The bank played a significant role in making the United States attractive for foreign investment and helped to establish the nation as a major economic power.
First Bank of the United States Facts
- The First Bank of the United States was a key part of Alexander Hamilton’s Financial Plan.
- President George Washington signed the charter for the First Bank of the United States into law on February 25, 1791.
- The bank’s 20-year charter ran from February 25, 1791, to January 24, 1811.
- Thomas Willing was the first President of the First Bank of the United States.
- The bank officially opened on December 12, 1791, at Carpenter’s Hall in Philadelphia and moved to New York City on July 24, 1797.
- In 1792, branches were opened in Baltimore, Boston, New York, and Charleston.
- The First Bank of the United States was the only bank that took payments for federal taxes and payments had to be made with notes from the First Bank of the United States.
- After the charter expired, it was not renewed by Congress due to concerns about foreign influence.
- Stephen Girard purchased the land, building, and most of the stock in the bank, and then opened the Girard Bank.
- Following the War of 1812, the Second Bank of the United States was established to help deal with government financial issues.
First Bank of the United States Frequently Asked Questions
Why did Alexander Hamilton want to establish the First Bank of the United States?
Alexander Hamilton, the Secretary of the Treasury under President George Washington, was behind the plan to set up the First Bank of the United States. Hamilton wanted to create a centralized institution similar to the Bank of England, which would handle the massive Revolutionary War debt and create a standard form of currency. The federal government would own 20% of the stock and have two seats on the board of directors. The First Bank of the United States, a National Bank, was chartered for a term of 20 years, by the United States Congress on February 25, 1791. The bank was intended to stabilize the currency and national debt and to facilitate economic growth in the United States.
What was the ownership structure of the First Bank of the United States?
The First Bank of the United States was primarily owned by private investors, but the federal government owned 20% of its capital. The government had the right to inspect the books of the bank at any time, but otherwise, the bank was privately held. Foreigners were allowed to be First Bank of the United States stockholders, but they were not allowed to vote.
What was the purpose of the First Bank of the United States, and what were its main functions?
The purpose of the First Bank of the United States was to act as the federal government’s fiscal agent. The bank was responsible for collecting tax revenues, transferring money, ensuring the government’s funds were secure, making loans to the government, accepting deposits and making loans to private citizens, paying the bills of the government, and paying interest payments to European investors. Interest rates were capped at 6%.
Why did Thomas Jefferson oppose the First Bank of the United States?
Opponents of the First Bank of the United States — led by Thomas Jefferson and James Madison — argued that centralization of power, moving away from private banks, was dangerous for a sound monetary system. Opponents of the bank also believed it benefited the business interests of merchants and industrialists in the North, like John Jacob Astor, rather than the agricultural interests of the South. Opponents also argued that the bank violated the Constitution, as the creation of a Bank of the United States or a government mint were not listed among the expressed powers allowed to the federal government.
Why was the charter for the First Bank of the United States not renewed after 20 years?
The charter for the First Bank of the United States was not renewed after 20 years due to opposition from some members of Congress who believed that the bank was too powerful, bordered on being unconstitutional, and was under foreign influence. After 20 years in existence, the charter for renewal was defeated by one vote, and the bank closed in 1811.
Who was the first president of the First Bank of the United States?
The first president of the First Bank of the United States was Thomas Willing, who had been president of the Bank of North America. Willing was a prominent businessman and politician from Philadelphia, who had served as a delegate to the Continental Congress and as mayor of Philadelphia. Although he voted against independence, he later provided money from his own pocket to support the war effort. Willing was appointed as president of the First Bank of the United States in 1791 and served in that role until 1807.
How did the opening of branches in various cities affect the operations of the First Bank of the United States?
The opening of branches in various cities allowed the First Bank of the United States to expand its operations and better serve customers across the country. The bank opened branches in Baltimore, Boston, New York, and Charleston in 1792. The bank’s ability to make loans and receive interest payments from customers in these cities helped to stabilize the national economy and promote trade and industry. At the time, the First Bank of the United States was the only bank in the country that was allowed to have branch offices.
Why was the need for a Second Bank of the United States felt after the closure of the First Bank of the United States?
The need for a Second Bank of the United States arose when the War of 1812 erupted. During the war, the federal government needed to borrow large sums of money to finance the war effort, but private banks were unwilling or unable to lend money. In response, the government chartered a second national bank — the Second Bank of the United States — in 1816. The Second Bank was modeled after the First Bank and had similar functions, including collecting taxes, transferring money, and making loans to the government and private citizens. The Second Bank of the United States remained in operation until it was dissolved in 1836.
First Bank of the United States AP US History (APUSH) Study Guide
Use the following links and videos to study the First Bank of the United States, Alexander Hamilton’s Financial Plan, and the United States Consitution for the AP US History Exam. Also, be sure to look at our Guide to the AP US History Exam.
First Bank of the United States APUSH Definition
The First Bank of the United States was a national bank established by Congress in 1791 as part of Alexander Hamilton’s Financial Plan for the United States under the Constitution. Although it helped stabilize the financial system, the bank also contributed to the growing divide between Federalists and Anti-Federalists which led to the development of political parties.
American History Central Resources and Related Topics
- Alexander Hamilton
- Thomas Jefferson
- James Madison
- United States Constitution Amendments
- Constitutional Convention of 1787
First Bank of the United States Video
This video from Course Hero provides an overview of the First Bank of the United States.
- Written by Randal Rust
