Development Of The First National Bank

1040 words - 5 pages

There have been many controversies since the United States declared independence in 1776. One of the many domestic issues that divided American citizens was developing the First National Bank in the late 1700s. Hamilton was in favor, while Jefferson opposed and American citizens chose their side based on what they believed what was best for the country. Hamilton proposed a Report on a National Bank in December of 1790 announcing what the National Bank would include. Hamilton’s proposal included, “The bank’s stock would be worth $10,000,000. 20,000 shares would be sold privately at $400 per share ... 5,000 shares or $2,000,000 of bank stock would be bought by the U.S. government. The bank would be run by a 25-man board of directors - 20 chosen by the shareholders and 5 by the government. The bank’s president would be elected by the board of directors. Notes and bills (money) issued by the bank would be redeemable on demand ... and would be accepted by the U.S. government for all payments due. The bank’s charter would run for 20 years and would be subject to renewal by Congress. The bank would be allowed to establish branch offices in other cities; its main branch would be in Philadelphia, the nation’s capital” (http://www.digitalhistory.uh.edu/teachers/lesson_plans/pdfs/unit3_ 4.pdf). Although the first part of the bank bill, establishing a national mint, did pass with ease, supporters and opposers debated the rest of the bill, which included the development of the National Bank, and in the end, the government made their action to address the issue.
Prior to the National Bank, there were State Banks; however, the banks kept going into debt when they couldn’t redeem their bank notes. They also were unstable and more than half closed before 1863. These are some of the reasons why Hamilton proposed the Bank Bill. America needed the Bank of the United States due to debt from the Revolutionary War. Hamilton was in charge of taking care of the debt, and he proposed a National Bank to strengthen the currency, which was different in all parts of the country, thereby strengthening the government. Ineffective state banks were the reason Hamilton was in favor of a United States Bank.
The New England and Mid-Atlantic states supported the National bank, represented by Secretary of Treasury, Alexander Hamilton. He thought the Bank Bill would help to stabilize the economy along with it being necessary in building a structured economy and possibly an empire for America. America had immense federal and state debts which caused problems with other countries that they had to pay back. Hamilton often looked to the Bank of England for guidance on how to build a federal bank because theirs was stable. The government would own 20% of the bank and there would be branches in every city. The bank would issue money that would be accepted nationwide through a similar currency, create new money, loan money to the government, and serve as a place for the...

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