Bank of the United States

The Columbia Encyclopedia, 6th ed.

Bank of the United States

Bank of the United States, name for two national banks established by the U.S. Congress to serve as government fiscal agents and as depositories for federal funds; the first bank was in existence from 1791 to 1811 and the second from 1816 to 1836.

The First Bank

The first bank was established under the auspices of the Federalists as part of the system proposed by Alexander Hamilton to establish the new government on a sound economic basis. Congress approved a charter for the bank despite the argument that the Constitution did not give Congress power to establish a central bank and the charge that the bank was designed to favor mercantile over agrarian interests.

The bank had a head office in Philadelphia and branches in eight other cities. The government subscribed one fifth of the capital of $10 million, but a loan of $2 million was immediately made to the government. In addition to acting as a fiscal agent for the government, the bank conducted a general commercial business.

It was well managed and paid good dividends, but its conservative policies and its restraining influence on state banks, through its refusal to accept state bank notes not redeemable in specie, antagonized more exuberant business elements, especially in the West. These interests combined with agrarian opponents of the bank to defeat its rechartering, despite the support given the bank by the Madison administration. The bank concluded its affairs and repaid its shareholders.

The Second Bank

Financing the War of 1812 proved difficult because of the lack of a central bank, and by the end of the war the financial system of the country was in chaos. Enough support was forthcoming in Congress and a new bank was chartered for 20 years. The second bank, capitalized at $35 million, operated much as did the first one, 25 branches being established.

After an initial period of difficulty during the presidency (1816–19) of William Jones, the bank was placed on a sound basis by Langdon Cheves (1819–22). It became especially prosperous under the management of Nicholas Biddle, but was criticized by state banks and frontiersmen on the grounds that it was too powerful and that it operated in the interests of the commercial classes of the East.

Opponents of the bank came into power with the election (1828) of Andrew Jackson. Although the bank's charter did not expire until 1836, Henry Clay persuaded Biddle to apply to Congress for a renewal in 1832. President Jackson vetoed the bill for its recharter, and the bank became a leading issue in his fight for reelection against Clay. Interpreting his victory at the polls as an expression of popular will on the subject, Jackson did not wait for the expiration of the bank's charter but began in 1833, through his new Secretary of the Treasury Roger B. Taney, to deposit government moneys in state banks, referred to by his opponents as "pet banks." Under Martin Van Buren's administration the Independent Treasury System was established to handle the government's funds.

Bibliography

See R. C. H. Catterall, The Second Bank of the United States (1902, repr. 1960); W. B. Smith, Economic Aspects of the Second Bank of the United States (1953); J. A. Wilburn, Biddle's Bank (1967).

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Bank of the United States
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.