First Bank of the United States

The creation of the first national bank in the United States was of utmost importance in setting precedence for how much power the constitution actually grants the government. The debate over whether to create a national bank raised many questions over the constitution that hadn’t been tested before. It also raised questions about what the government can do when the constitution has no written clause on a certain subject. In looking at the arguments from Alexander Hamilton, James Madison, and Thomas Jefferson regarding a national bank, people can find out more about how some of the leading founders of the Constitution wanted to see the United States government run.

He believed that the Bank has to be abolished due to several reasons. First of all, the bank concentrated the nation's wealth in a single institution which created an unhealthy for the economy monopoly. Second of all, he believed that the bank favored the wealthy over the common people. The third reason was that the bank had too much control over members of Congress. In other words, the subsidy of the bank to one particular party or the lack of the finance could influence the results of the elections at some point. And the bank also favored northeastern states over southern and western states. Thus, Jackson succeeded in destroying the Bank by vetoing its 1832 re-charter by Congress and by withdrawing U.S. funds in 1833. This action led to federal money being put into state banks who then loaned it out freely leading to inflation. State banks were issuing paper banknotes that were not backed by gold or silver reserves which led to rapid inflation. Moreover, the expansion of credit and speculation took place. As a result, state banks collapsed which was a cause of the Panic of 1837. However, despite the crisis and depression, the liquidation of the Bank was an achievement of Jackson’s presidency and led to trivial of the economy later on.

Andrew Jackson wrote a letter to Congress on July 10, 1832, saying the “rich and powerful too often bend the acts of government to their selfish purposes" (Doc. F). Jackson is talking about the national bank in this letter to Congress and it was very well known from his close friends that he had “always been afraid of banks... [and called bankers} ‘“vipers and thieves’” (Shi, Tindall, 324). He thought that the national bank caused the government to have too much control over the people, but the way

Hamilton’s creation of the first bank in the United States continues to exist in today’s economic environment. However, at that time Hamilton’s proposal was met with widespread resistance from individuals such as James Madison and Thomas Jefferson who considered the creation of a federal bank as unconstitutional. The analysis made by Gordon in his book is consistent with arguments made by to have a bank that would be effective in order to implement the powers authorized by the government as it was implied in the constitution

Out of all the obstacles that the federalists had faced, the economy was, by far, the most problematic and the most difficult to find a solution for all parties. The country was not in a very stable position because of the recent crises like the whisky rebellion, or money-producing ideas such as bonds. Hamilton, Madison, and Jefferson played major roles in establishing the economy of the United States at the time, and also had a large role in the development of today’s government and economy. Without the ideas of these men, the United States economy may have the same problems today that the federalists faced then. And in the end, even though the idea of a national bank was redundant, that is what removed the United States from

The Bank War was the name given to the campaign begun by President Andrew Jackson in 1833 to destroy the Second Bank of the United States. The Second Bank had been established in 1816, as a successor to the First Bank of the United States, whose charter had been permitted to expire in 1811. In the veto message, President Jackson eagerly rejects a bill that leased the Bank of the United States. He argues that the Bank gives privilege and unfair advantage to a wealthy few at the expense of the public, and he opposes foreign ownership of Bank stock. The President claims the same right to interpret the Constitution as Congress and the Supreme Court when he questions the constitutionality of the Bank. The bank’s charter was unfair, Jackson argued in his veto message, that the bank was given significantly to much market power, specifically in the markets that moved financial properties from place to place in the country and into and out of additional nations. That market power enlarged the bank’s revenues and consequently its stock price, “which operated as a gratuity of many millions of dollars to the stockholders,”. Jackson proposed that it would be reasonable to the majority of

The Bank Recharter Bill of 1832 was a bill designed to renew the corporate charter of the Second Bank of the United States. Although Congress passed the bill, Andrew Jackson vetoed it a week later. President Andrew Jackson opposed the Second Bank of the United States because he believed that it held too much power without accountability and that it was unconstitutional.The bank was heavily biased toward business interests and had no congressional oversight. This bias led the bank to not support western expansion, which Jackson favored. Jackson also felt that the bank was too powerful, both politically and economically.

Nicholas Biddle proved great opposition to President Jackson. He wanted to re-charter the National Bank; however, many people were against Biddle’s decision. This was particularly true of people in the west. They were still wary of a national bank, after the Panic of 1819, which involved mishaps in land speculation. Jackson shared the predominately western opinion that several small banks would be a better service to the nation than one, large bank would. A major problem with a national bank would lie in it’s willingness only to make loans to the wealthy. This would be of no use to the middleclass. Jackson would not allow Biddle to gain any more power than he already had.

With the Jackson administration into office, the Second Bank of the United States became threatened. President Jackson had a private prejudice that wasn’t party policy (Schlesinger 74). He hated banks, all banks, but he especially hated the Second Bank of the United States. He viewed all bankers as “little more than parasites who preyed upon the poor and honest working people of America” (Roughshod 2). The reason for his hatred most likely stemmed from his near ruin as a businessman (land speculator, merchant, and slaver trader) when in the 1790s he accepted some bank notes that turned out to be worthless. From then on, he never trusted anything but hard money, or specie (Roughshod 2).

In addition to saving the integrity of the Federalist-dominated Supreme Court in the case of Marbury v. Madison, John Marshall also promoted certain Federalist principles, including the idea of a strong national government. From the years when the Constitution was being created, Alexander Hamilton fought for the creation of a national bank since he believed it was “necessary and proper” for the growth and development of the United States (“The Marshall Court”). As Hamilton and the Federalist Party had hoped, a national bank was created and one of its branches was placed in Baltimore, Maryland. State legislators from Maryland were not satisfied with the progress the bank was making because the negligent behavior of its bank officials was bringing the bank under (Newmyer, 295). To save their citizens from having to deal with the bank’s faulty leadership, the legislators attempted to drive the branch out of the state by placing a tax on all the banknotes issued by the bank. When the tax was purposely left unpaid, Maryland sued the cashier of the bank--James McCulloch. In the state courts, Maryland won its case,

     The early enactment of a National Bank would never have existed without Hamilton’s drive. He single handedly planned and set the foundation for a bank, which was essential to his fiscal philosophy. His presentation to congress was so detailed and thorough that a majority if the House even needed explanation as to the rudimentary function of the bank (Mitchell 197). Jeffersonians opposed this plan because they had a strict view of the constitution, which did not call for a national bank. Hamilton used the elastic clause to justify this, and felt that the bank was “necessary and proper” to the function of the government. He also knew that the politicians he needed

One of Jefferson’s and Hamilton’s first disagreements began with the idea of a National Bank. Hamilton suggested that the government should create the Bank of the United States Jefferson protested because this was not allowed by the Constitution. Hamilton opposed the view of Jefferson and stated that the Constitution’s writers could not have predicted the need of a bank for the United States. Hamilton said that the right to create the Bank of the United States was stated in the “elastic” or the “necessary and proper” clause in which the Constitution gave the government the power to pass laws that were necessary for the welfare of the nation. “This dilemma revisits the ever lasting dispute between the “strict constructionists” (Jefferson) who believed in the strict interpretation of the Constitution by not going an inch beyond its clearly expressed provisions, and the “loose constructionists” (Hamilton) who wished to reason out all sorts of implications from what it said”. Just a few years later, under President Jefferson, the federal government of the United States

The Bank of the United States was technically the second bank of the U.S. since the first bank’s charter ended in 1811. The second bank held a monopoly over federal deposits, provided credit to growing enterprises, issued banknotes that served as a dependable medium of exchange, and used a restraining effect on the less well-managed state banks. Jackson didn’t trust the bank and thought it had too much power, so Jackson sought out to destroy it. There were two different groups when it came to opposition, “soft-money” and “hard-money”. Soft money supporters were progressive, they believed in economic growth and bank speculation. They supported the use of paper money and were mainly made up of bankers and allies to bankers. Hard money supporters were against expansion and bank speculation. They supported coinage only and rejected all banks that used paper money, which included the federal bank. Jackson was a hard money supporter although, he felt sympathy to the soft money supporters. Jackson could not legally end the bank before its charter expired. By removing the

The first central bank, First Bank of the United States, was first proposed by Alexander Hamilton. Hamilton wanted to use the bank to pay off Revolutionary War debts and to raise future money for the government. The First bank of the United was signed in 1791 and ran until 1811. During its function, Stephan Girard purchased majority shares and ran the bank. Congress refused to renew the bank at the end of its 20- year charter.

The history of central banking in America dates back to 1781 when the first bank of North America was chartered by the state of Pennsylvania with the help of Robert Morris. It was the first ban k in America’s history to receive deposits and issue its own banknotes. Four years later, two more banks were created that also issued their own bank notes: the bank of New York and the Massachusetts bank. (thismatter.com) Some were not very supportive of the formation of a central baking system because of England’s efforts to place the colonies under the control of the bank of England while others were strongly in favor of it. As stated in the articles of confederation, congress was given the power to print bills of credit and to establish a national bank similar to the bank of England but objections rose of “alarming foreign influence and fictitious credit” (Wikipedia.org) that hindered its ability to accomplish its intended role.