BANK OF THE UNITED STATES 574 BANK OF THE UNITED STATES 



ful than vast aggregations of capital. The 

 original capital, consist inn chiefly of t! 

 made -, government, has been 



increased many times, until the authorized 

 capital at tune is 14,553,000 



($72.765,000). The bank issues notes to the 

 VOOO ($88375,000), without hav- 

 ing gold in resei y on demand ; for all 

 notes issued in excess of the sum mentioned 

 gold must be held. The notes are of the 

 denomination of 5 and upwards to 1,000. 



The building occupied by the bank is sit- 

 :n the center of the busiest part of Lon- 

 don, almost directly opposite the Mansion 

 House, at the corner of Threadneedle Street, 

 hence it is frequently alluded to as the "Little 

 Old Lady of Threadneedle Street" a term of 

 respect rather than of ridicule. There is noth- 

 ing romantic or architecturally beautiful to dis- 

 tinguish it from any other building, except that 

 it is perhaps a little more somber than its 

 surroundings. The bank is managed by a gov-' 

 ernor, deputy governor and twenty-foui direc- 

 tors. The board of directors meets weekly, 

 when a statement is issued showing the finan- 

 cial status of the bank, in accordance with a 

 law passed in 1844. Q.H.L. 



BANK OF THE UNITED STATES. In 1789, 

 when the Constitution of the United States 

 went into effect, there were only three banks 

 in the country. They had a small note circula- 

 tion in the cities in which they were situated, 

 but most of the people in the states had never 

 seen a bank note. Alexander Hamilton, Sec- 

 of the Treasury, proposed that the gov- 

 ernment charter a bank which would issue a 

 national paper currency and would be the 

 financial agent of the United States. 



There was much opposition to Hamilton's 

 plan. Some critics declared that the bank 

 would merely enrich a few capitalists at the 

 general expense ; others said that it would be an 

 "aristocratic institution intended to pave the 

 way to a monarchy." The most serious objec- 

 tions came from the followers of James Mad- 

 ison and Thomas Jefferson, who argued that 

 the Constitution did not especially give Con- 

 gress the right to charter any corporation. 

 Washington, who was then President, asked 

 Hamilton and Jefferson to prepare written 

 statements of their views, and these papers are 

 among the great documents of American his- 

 tory. In them were clearly outlined the doc- 

 trines of "strict" and "broad" construction of 

 the Constitution, the doctrines which were to 

 form later the basis of political parties. 



The First Charter. Congress and the Pres- 

 ident adopted Hamilton's view, and on Feb- 

 ruary 25, 1791, the Bank of the United States 

 \\:is chartered for twenty years. Its main office 

 was fixed at Philadelphia. The capital was 

 $10,000,000, of which the government took 

 2,000,000. The paper money issued by the 

 bank was legal tender for all debts due to the 

 national government. Its large capital and its 

 branches in New York, Boston and other cities 

 gave it a great advantage over the state banks 

 and it easily dominated the banking system 

 much as the Bank of England still does in 

 Great Britain. The government sold its stock 

 after a few years, and when the charter expired 

 in 1811 the national government had no vital 

 interest in the bank. The opposition of the 

 state banks was strong enough to prevent the 

 renewal of the charter, and the bank wound up 

 its affairs. 



The Second Charter. During the War of 

 1812 most of the state banks suspended specie 

 payments, with the result that the paper cur- 

 rency of the country was in a terribly dis- 

 ordered condition. Some bank notes were 

 worthless, some were worth perhaps ten cents 

 on the dollar, a few were worth fifty cents or 

 thereabouts on the dollar, and probably none 

 could be exchanged at par. 



Under the circumstances there arose a de- 

 mand for a new Bank of the United States. 

 The second Bank was chartered on April 3, 

 1816, with a capital of $35,000,000, of which the 

 government subscribed for one-fifth. The bank 

 was the official depository for government 

 money, and it was the agent for the national 

 and state governments. It prospered, and in 

 a few years seemed as firmly established as the 

 government itself. It had large deposits, and 

 its notes were as good as gold, not only in the 

 United States but in European countries. 



The bank's power had made some enemies, 

 but there was no organized opposition to it 

 until Jackson became President. Two of Jack- 

 son's supporters in New Hampshire complained 

 that the Portsmouth (N. H.) branch of the 

 Bank was being mismanaged. In charge of the 

 branch was one Jeremiah Mason, one of Jack- 

 son's bitterest opponents, and chiefly for polit- 

 ical reasons the bank was doomed. Mason was 

 defended by the Bank's officers, while Jackson, 

 disregarding the Mason episode, charged that 

 "both the constitutionality and the expediency 

 of the law creating this Bank are well ques- 

 tioned by a large portion of our fellow-citizens." 



Practically the whole of Jackson's first term 



