First Bank of the United States
The First Bank of the United States
The Bank of the United States was designed to make money and build an economy. It was designed by men like Alexander Hamilton and Robert Morris, but did not benefit the common citizen as much as wealthy investors. Why did a fledgling government need to borrow millions from overseas in order to invest in a “national” bank, to turn around and then borrow the same money back and pay interest on it? The banking system developed by Alexander Hamilton and Robert Morris was prime pickings for speculators, and laid the groundwork for a history of unscrupulous activity regarding our nation’s money supply that continues to this day. The signatures on the Constitution were barely dry before corruption and greed laid their roots in our country’s economic foundation.
It is not difficult to imagine a scenario where massive speculation by investors would cause a bubble in the money market. In such a scenario prices of shares climb over 1000%. So intense is the frenzy to get involved in the speculation game that people forgo their regular daily duties in order to get their money invested. Commerce grinds to a halt. The Secretary of the Treasury attempts to manipulate the situation by communicating with investors and having them curb their speculations in order to stabilize prices. Fearing that they are overextending, bankers cease extending credit to investors. The bubble bursts and prices plummet.
This story could seemingly be ripped from today’s headlines. Instead, the foregoing was the story of birth of the first Bank of the United States. The banks tumultuous beginnings sent ripples through the precarious early-American economy. Hamilton endeavored to mold this economy into a capitalistic, industrial power, contrary to the wants of much of the agrarian population of the country. The Bank of the United States was his tool to direct the future of America, yet Hamilton and his bank were not without their detractors. Most
The Bank of the United States was designed to make money and build an economy. It was designed by men like Alexander Hamilton and Robert Morris, but did not benefit the common citizen as much as wealthy investors. Why did a fledgling government need to borrow millions from overseas in order to invest in a “national” bank, to turn around and then borrow the same money back and pay interest on it? The banking system developed by Alexander Hamilton and Robert Morris was prime pickings for speculators, and laid the groundwork for a history of unscrupulous activity regarding our nation’s money supply that continues to this day. The signatures on the Constitution were barely dry before corruption and greed laid their roots in our country’s economic foundation.
It is not difficult to imagine a scenario where massive speculation by investors would cause a bubble in the money market. In such a scenario prices of shares climb over 1000%. So intense is the frenzy to get involved in the speculation game that people forgo their regular daily duties in order to get their money invested. Commerce grinds to a halt. The Secretary of the Treasury attempts to manipulate the situation by communicating with investors and having them curb their speculations in order to stabilize prices. Fearing that they are overextending, bankers cease extending credit to investors. The bubble bursts and prices plummet.
This story could seemingly be ripped from today’s headlines. Instead, the foregoing was the story of birth of the first Bank of the United States. The banks tumultuous beginnings sent ripples through the precarious early-American economy. Hamilton endeavored to mold this economy into a capitalistic, industrial power, contrary to the wants of much of the agrarian population of the country. The Bank of the United States was his tool to direct the future of America, yet Hamilton and his bank were not without their detractors. Most
Bibliography: Chernow, Ron. Alexander Hamilton. New York, NY: The Penguin Press, 2004. Clarke, M. and Hall, D.A. Legislative and Documentary History of the Bank of the United States: Including the Original Bank of North America. Washington, D.C.: Gales and Seaton, 1832 Cunningham Jr., Noble E Foley, John P. The Jeffersonian Cyclopedia A Comprehensive Collection of the Views of Thomas Jefferson. New York: Funk and Wagnalls Company, 1900. Hamilton, Alexander, The Papers of Alexander Hamilton. 27 Volumes. New York: Columbia University Press, 1961-1981. Hammond, Bray. Banks and Politics in America from the Revolution to the Civil War. Princeton, NJ: Princeton University Press, 1957. Kaplan, Edward S. The Bank of the United States and the American Economy. West Port, CT: Greenwood Press, 1999. Markham, Jerry. A Financial History of the United States Volume 1 From Christopher Columbus to the Robber Barons (1492-1900). Armonk, NY: M.E. Sharp Inc., 2004. Thomas Jefferson, Opinion on the Constitutionality of a National Bank, February 15, 1791 Samuelson, Paul and Krooss, Herman, Documentary History of Banking and Currency in the United States (Boston, MA: Bedford/St. Martin’s, 2000.) 50 [ 2 ] [ 5 ]. Thomas J. DiLorenzo, Central Banking as an Engine of Corruption. (www.mises.org April 16 2010) [ 6 ] [ 7 ]. Jerry Markham A Financial History of the United States Volume 1 From Christopher Columbus to the Robber Barons (1492-1900). (Armonk, NY: M.E. Sharp Inc., 2004.) 88 [ 8 ] [ 9 ]. M Clarke and D.A. Hall, Legislative and Documentary History of the Bank of the United States: Including the Original Bank of North America. (Washington, D.C.: Gales and Seaton, 1832) 55 [ 10 ] [ 11 ]. Thomas Jefferson, Opinion on the Constitutionality of a National Bank, February 15, 1791 [ 12 ] (Boston, MA: Bedford/St. Martin’s, 2000.) 62 [ 13 ] [ 14 ]. Ron Chernow,. Alexander Hamilton. (New York, NY: The Penguin Press, 2004) 360 [ 15 ] [ 16 ]. Jerry Markham A Financial History of the United States Volume 1 From Christopher Columbus to the Robber Barons (1492-1900). (Armonk, NY: M.E. Sharp Inc., 2004.) 111 [ 17 ] [ 18 ]. Alexander Hamilton, Report on a National Bank, 1790 in Noble E. Cunningham Jefferson vs. Hamilton Confrontations That Shaped a Nation. (Boston, MA: Bedford/St. Martin’s, 2000.) 46 [ 19 ] [ 20 ]. Bray Hammond. Banks and Politics in America from the Revolution to the Civil War. (Princeton, NJ: Princeton University Press, 1957) 196. [ 22 ]. Edward Kaplan. The Bank of the United States and the American Economy. (West Port, CT: Greenwood Press, 1999 ) 29 [ 23 ] [ 24 ]. Thomas Jefferson to Albert Gallatin, Washington DC, 13 December 1803 in John P Foley The Jeffersonian Cyclopedia A Comprehensive Collection of the Views of Thomas Jefferson. (New York: Funk and Wagnalls Company, 1900.) 71 [ 25 ] [ 26 ]. Paul Samuelson, and Herman Krooss, Documentary History of Banking and Currency in the United States. (New York: Chelsea House Publishers, 1969 )350 [ 27 ] [ 28 ]. Jerry Markham A Financial History of the United States Volume 1 From Christopher Columbus to the Robber Barons (1492-1900). (Armonk, NY: M.E. Sharp Inc., 2004.) 127 [ 29 ]