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The '''The First Bank of the United States''' ("BUS") was the nation's most important business and financial institution during its twenty-year lifetime, 1791-1811. It was a central bank that gave the nation a a solid, conservative financial system.  The BUS was supported by the business community, especially merchants and financiers, but opposed by the agrarian Jeffersonians in the [[Democratic-Republican Party]]. The Jeffersonians refused to renew its charter in 1811 and the bank was closed.

The '''The First Bank of the United States''' ("BUS") was the nation's most important business and financial institution during its twenty-year lifetime, 1791-1811. It was a central bank that gave the nation a a solid, conservative financial system.  The BUS was supported by the business community, especially merchants and financiers, but opposed by the agrarian Jeffersonians in the [[Democratic-Republican Party]]. The Jeffersonians refused to renew its charter in 1811 and the bank was closed.

==Early history==

==Origins==

After a bitter fight in Congress between Treasury Secretary [[Alexander Hamilton]] and a coalition led by [[Thomas Jefferson]] the bank supporters won over President [[George Washington]] and chartered the BUS for 20 years on Feb. 25, 1791. The BUS was always a privately owned and operated corporation, but it worked closely with the Treasury department. Its opponents feared it would be a patronage machine and would be an engine of political corruption. The opponents generally feared cities, factories and money managers ("speculators") and instead said that true virtue could only be found among landowning "yeomen" farmers.

After a bitter fight in Congress between Treasury Secretary [[Alexander Hamilton]] and a coalition led by [[Thomas Jefferson]] the bank supporters won over President [[George Washington]] and chartered the BUS for 20 years on Feb. 25, 1791. The BUS was always a privately owned and operated corporation, but it worked closely with the Treasury department. Its opponents feared it would be a patronage machine and would be an engine of political corruption. The opponents generally feared cities, factories and money managers ("speculators") and instead said that true virtue could only be found among landowning "yeomen" farmers.

The BUS was modeled after the older and larger [[Bank of England]] in London. The role of the BUS was to handle routine government transactions, like tariff payments, taxes, and spending, as well as private business. There were only a dozen or so private banks in the U.S. (all in major cities) and the BUS, was the only one with branches.  A major role was to be a stabilizing and regulatory influence upon the circulation of banknotes issued by private banks, which made the BUS a central bank something like the later Federal Reserve System. In addition to providing some central banking  functions, the first Bank of the United States was to provide business with  capital for growth and for every other type of commercial banking service. Its  charter provided for a privately owned, profit-making national bank capitalized  at $10 million, of which the federal government was allowed to subscribe $2  million. The remaining stock was sold publicly. The total indebtedness of the  bank, "whether by bond, bill, note, or other contract," was limited to $10  million, the total of its capital. The operation of the bank was entrusted to a  board of 25 directors, all of whom had to be U.S. citizens. The stockholders  elected the bank's directors who, in turn, elected its president. The bank's  charter required that its officers submit regular reports to the secretary of  the treasury.

The BUS was modeled after the older and larger [[Bank of England]] in London. The role of the BUS was to handle routine government transactions, like tariff payments, taxes, and spending, as well as private business. There were only a dozen or so private banks in the U.S. (all in major cities) and the BUS, was the only one with branches.  A major role was to be a stabilizing and regulatory influence upon the circulation of banknotes issued by private banks, which made the BUS a central bank something like the later Federal Reserve System. In addition to providing some central banking  functions, the first Bank of the United States was to provide business with  capital for growth and for every other type of commercial banking service.  

The BUS opened eight between 1792 and 1805. The size of the bank's capital, its ample gold and silver reserves, its close ties with the government, and its  capable management gave it a commanding and favorable influence on the economy.  The bank returned a good profit to its investors averaging 8% a year.  

The BUS opened eight between 1792 and 1805. The size of the bank's capital, its ample gold and silver reserves, its close ties with the government, and its  capable management gave it a commanding and favorable influence on the economy.  The bank returned a good profit to its investors averaging 8% a year.  

The Jeffersonian cries of corruption hurt the BUS; some people denounced it a device that clever financiers used to take away the hard-earned money of farmers and workers.  Strict constructionists of the Constitution opposed it as a dangerous and  unconstitutional extension of the power of the federal government.  

The Jeffersonian cries of corruption hurt the BUS; some people denounced it a device that clever financiers used to take away the hard-earned money of farmers and workers.  Strict constructionists of the Constitution opposed it as a dangerous and  unconstitutional extension of the power of the federal government.  

 

The bank's charter came up for renewal in 1811 when the [[Federalist Party]] was in low repute and Britain was hated and under economic attack through the [[Embargo of 1807]] and similar laws. Everyone knew the bank controlled by Federalists and much of its stock was by 1811  held in Britain and Europe, further damaging its credibility among Jeffersonians. In January and February 1811, by close votes in Congress its charter was not renewed and the BUS was forced to wind up its business affairs.  

The bank's charter came up for renewal in 1811 when the [[Federalist Party]] was in low repute and Britain was hated and under economic attack through the [[Embargo of 1807]] and similar laws. Everyone knew the bank controlled by Federalists and much of its stock was by 1811  held in Britain and Europe, further damaging its credibility among Jeffersonians. In January and February 1811, by close votes in Congress its charter was not renewed and the BUS was forced to wind up its business affairs.