40G 



BANK. 



Naples, Christiania, Rome, Rotterdam, Stockholm, 

 Niuttgard, Vienna, and the imperial hanks of Russia. 

 Hunk of the United States of America. The old 

 bank of the United States was incorporated by an 

 act of congress, approved February, 1791. By the 

 limitation of tht 1 charter, it was to expire on the 4th 

 of March, 1811. This, like the b;mks of Kn-ian.l, 

 France, and Sweden, was a bank of deposit, discount, 

 and circulation, with a capital of 10,000,000 dollars. 

 Those European writers, both British and French, 

 who have eulogized this institution as being purely 

 commercial, and distinguished from those of England 

 and France by not being connected with the govern- 

 ment, or an engine of finance, cannot have read the 

 charter, the preamble to which begins thus : 

 " Whereas the establishment of a bank will be very 

 conducive to tin- conducting of the national finances, 

 will tend to give facility to the obtaining of loans for 

 the use of the government in sudden emergencies, 

 and will be productive of considerable advantages to 

 trade and industry in general." &c. Instead of being 

 a merely commercial establishment, therefore, it was, 

 essentially and mainly, of a financial and political 

 cliaracter, and it was on this ground that its consti- 

 tutionality was defended ; the right of congress to 

 grant such a charter being claimed mostly upon the 

 strength of that clause of the constitution, which 

 gives to congress the power necessary for carrying 

 into execution the powers enumerated, and expressly 

 vested in that body. The origin of this establishment 

 was, therefore, similar to that of the bank of Eng- 

 land, and the resemblance is not limited to the gene- 

 ral purposes of its institution, for, as the bank of 

 England originated in a loan to the British govern- 

 ment, so the act by which the old bank of the United 

 States was chartered, provided that the sums sub- 

 scribed by individuals and corporations should be 

 " payable, one-fourth in gold and silver, and three- 

 fourths in the public debt " certificates. The presi- 

 dent of the United States was authorized to subscribe 

 for two millions of the stock in behalf of the United 

 States. The directors, being twenty -five, were chosen 

 by the stockholders, without any interference, on the 

 part of the government, in the election ; but the 

 government reserved the right of inspecting the aflairs 

 of the bank, and, for this purpose, the secretary of 

 the treasury was authorized to demand of the presi- 

 dent and directors a statement of its concerns as often 

 as he might see fit. The corporation was authorized 

 to establish branches in any part of the United States. 

 The only restriction, as to circulation, was, that the 

 amount of debts due from the corporation, by bond, 

 bill, note, or otherwise, besides the debts due for de- 

 posits, should never exceed 10,000,000 dollars ; and, 

 in case of excess, the directors, by whose agency 

 such debt should be incurred, were made personally 

 answerable. This bank went into operation, and 

 had a most powerful agency in establishing the credit 

 of the government, facilitating its financial operations, 

 and promoting the interests of industry and com- 

 merce. Congress having refused to renew the char- 

 ter, it expired, by its own limitation, in 1811. But, 

 during the war which ensued, the want of a national 

 bank was severely felt, not only as an agent for col- 

 lecting the revenues, but more especially for trans- 

 mitting funds from one part of the country to ano- 

 ther ; and then it might have been a useful auxiliary 

 to the public credit, by supplying temporary loans in 

 cases of emergency. So thoroughly convinced were 

 the public of the necessity of such an institution, that 

 the members of the same political party from which 

 the constitutional objections had been made to the 

 old bank,' and which had refused to renew its char- 

 ter, passed an act of congress, which was approved 

 by the president, April 10, 1816, chartering the 



present bank of the I'liiled States, with a capita} 

 of 35,000,000 dollars, upon principles, and with 

 provisions, very similar to those contained in the 

 former charter. For this charier the government 

 demanded and received a bonus of 1,500,000 dol- 

 lars from the stockholders. The government be- 

 came a stockholder in the same proportion as in the 

 former bank, taking one fifth, or 7, 000,000 dollars of 

 the stock. The direction of the institution was left 

 to the stockholders, as in the old bank, except that 

 the government reserved the right of appointment 

 and removal at pleasure, by the president, of five 

 directors out of the twenty- five, the other twenty 

 being elected by the stockholders. The government 

 also reserved the right to demand a statement of the 

 concerns of the institution by committees of either 

 branch of the legislature. One quarter of the sub- 

 scriptions to the stock were payable either in gold 

 or silver, or United States stock, at the option of 

 subscribers. The seven millions to be subscribed 

 by the government was payable either in gold and 

 silver, or public stock at an interest of five per cent., 

 at the option of the government. The transactions 

 of the corporation were limited to making loans and 

 trading in the precious metals, and the sale of such 

 goods or proceeds of such lands as should be pledged. 

 Branches may be established in any parts of the 

 United States or their territories. No other similar 

 corporations are to be chartered by the government, 

 except banks in the district of Columbia, with a ca- 

 pital, in the whole, not exceeding 6,000,000 dollars, 

 during the period for which the charter was granted, 

 namely, to the 3d of March, 1836. The bank is 

 prohibited from purchasing any part of the public 

 debt, taking interest over six per cent., or loaning 

 to the government over 500,000 dollars, or to any 

 state over 50,000 dollars. And the debts of the in- 

 stitution are in no case to exceed the amount of de- 

 posits by more than 35,000,000 dollars. And, in 

 case of refusing payment of its notes or deposits in 

 specie, the bank is made liable to pay interest at the 

 rate of twelve per cent, per annum. The bank is 

 also obliged, by its charter, to give the government 

 the necessary facilities for transferring the public 

 funds from place to place within the United States, 

 without charging commissions, or claiming any al- 

 lowance on account of the difference of exchange, 

 and to transact all the business of commissioners of 

 loans whenever required so to do. The bank is 

 prohibited from issuing bills under the denomination 

 of five dollars. 



It is an object proposed by the charter, as appears 

 from some of the provisions already noticed, to make 

 the institution independent of the fortunes, and place 

 it beyond the exigencies of the government, by limit- 

 ing the amount of loans that may be made to the 

 government, and prohibiting the purchase of the 

 public debt. It is not in the power of congress to 

 exonerate the bank from the liability to pay, in 

 specie, its deposits made, or notes put into circula- 

 tion, previously to the passing of any act for that 

 purpose; so that the depositors and holders of its 

 notes are entirely secure from any interposition of 

 the government between themselves and the bank, 

 in violation of the contract held by them. The in- 

 stitution is thus essentially commercial in its charac- 

 ter, being directly auxiliary to the government, and 

 subject to its control only as a financial engine. It 

 has had an important influence upon the industry and 

 commerce of the country, and the credit of the go- 

 vernment ; and has been of immense utility in the 

 management of its finances. But its greatest and 

 most beneficial influence has been felt in the restora- 

 tion of the currency to a sound state ; for, at the 

 time of its going into operation, many of the state 





