US National Banks 1781-1836 & 1863-1913

  1. May 1781 Bank of North America, based in Philadelphia PA, chartered by Congress (of the Confederation) as a de facto central bank. Received large loans of gold, silver coin, and bills of exchange from France and Netherlands. Accordingly, issued its own banknotes.
    However the Pennsylvania government objected to its privileges, and in 1786 reincorporated it as a private concern under state law. With several restrictions, it was unsuitable as a national bank.
  2. Feb 1791 Preparing to build its capital city of Washington DC, Congress chartered the Bank of the United States, today known as the First Bank of the United States. It was chartered for a term of twenty years with twenty percent of its capital owned by the federal government (via a loan from the bank). In 1811, its assets were liquidated, to become the Girard Bank.
  3. Feb 1816 Congress chartered a second Bank of the United States, again with a twenty years charter and with twenty percent of its capital owned by the federal government. Not having the restrictions of state incorporated banks, it had opened 25 branch offices nationwide by 1832.

However when its federal charter ended in January 1836, the bank became a private corporation in February under Pennsylvania law. The bank then suspended payment on its paper in 1839 with the suspension becoming permanent in 1841, until it had liquidated all its assets in 1852. The lack of a national bank to regulate fiscal matters and the shortage of hard currency saw the Panic of 1837 when nearly half the banks in the USA failed. Businesses closed, prices declined, and there was mass unemployment. From 1837 to 1844 deflation in wages and prices was widespread. Major recovery only really arrived in 1848 with the discovery of gold in California, followed by "National" banks re-emerging 1863-1913. In 1913 the Federal Reserve Act divided the USA into twelve federal districts, creating the Federal Reserve bank, plus the Bureau of Internal Revenue (the IRS) for income tax collection.