First Bank in America Chartered in Philadelphia, December 31, 1781

Congress again assembled in Philadelphia on July 2, 1778, and on the 9th the “Articles of Confederation,” engrossed on parchment, were signed by the delegates of eight States.

Pennsylvania was one of those states which immediately acceded to the Confederation. The delegation from this State consisted of Benjamin Franklin, Robert Morris, Daniel Roderdeau, Jonathan Bayard Smith, James Smith, of Yorktown; William Clingan and Joseph Reed.

The “Articles of Confederation” were submitted to the several State Legislatures. Slowly the States ratified them, some of them pointing out serious defects, and all taking time to discuss them. The first State to ratify, in addition to the eight which immediately signed, was North Carolina, July 21, but Maryland steadily refused until March 1, 1781, when the League of States was perfected.

It was soon perceived that under this new Government the Congress had no power, independent of the several States, to enforce taxation.

Robert Morris, then Superintendent of Finance (Secretary of the Treasury), proposed the establishment of a bank in Philadelphia, to supply the Government with money, with a capital of $400,000.

The promissory notes of the bank were to be a legal tender of currency, to be received in payment of all taxes, duties and debts due the United States.

922But before Congress could act the patriotic citizens of Philadelphia moved for the establishment of a bank by which means the soldiers in the Continental Army could be supplied with provisions.

A plan for this bank was prepared in Philadelphia which set forth the entire scheme of subscription and operation, down to the minutest detail, even stating that the factor (cashier) “shall provide his store with rum, sugar, coffee, salt and other goods at the cheapest price to those who supply him with provisions, that he may gain a preference of what comes to market.” The provisions were to be purchased for the army in the field.

This plan named the original board of inspectors, Robert Morris, J. M. Nesbitt, Blair M'Clenachan, Samuel Miles and Cadwallader Morris. The two directors were John Nixon and George Clymer and the factor was Tench Francis.

The subscription list was headed:

“Whereas, in the present situation of public affairs in the United States, the greatest and most vigorous exertions are required for the successful management of the just and necessary war in which they are engaged with Great Britain; We, the subscribers, deeply impressed with the sentiments that on such an occasion should govern us, in the prosecution of a war, in the event of which, our own freedom and that of our posterity and the freedom and independence of the United States are all involved, hereby severally pledge our property and credit for the several sums specified and mentioned after our names, in order to support the credit of a bank to be established for furnishing a supply of provisions for the armies of the United States; and we do hereby severally promise and engage to execute to the directors of the said bank bonds of the form hereunto annexed.

“Witness our hands the 17th day of June, in the year of our Lord, 1780.”

There were ninety-two original patriot subscribers, the total pledges of whom amounted to £300,000 Pennsylvania currency, payable in gold or silver.

Robert Morris and Blair McClenachan each subscribed £10,000; Bunner, Murray & Co., £6000; Tench Francis, £5500; James Wilson, George Clymer, William Bingham, J. M. Nesbitt & Co., Richard Peters, Samuel Meredith, James Mease, Thomas Barclay, Samuel Morris, Jr., John Cox, Robert L. Hooper, Jr., Hugh Shiell, Samuel Eyre, Matthew Irwin, Thomas Irwin, John Philip De Haas, Philip Moore, John Nixon, Robert Bridges, John Benezet, Henry Hill, John Morgan, Samuel Mifflin, Thomas Mifflin, Thomas Willing and Samuel Powell, each subscribed £5000.

None of the subscribers pledged less than £1000, and it is a question if ever a more liberal list of patriots could be found anywhere than this one.

923This bank opened its doors on July 17, 1780, in Front Street, Philadelphia, two doors above Walnut.

To show the mode of doing business an old advertisement says: “All persons who have already lent money are desired to apply for bank notes; and the directors request the favor of those who may hereafter lodge their cash in the bank, that they would tie it up in bundles of bills of one denomination, with labels, and their names indorsed, as the business will thereby be done with less trouble and much greater dispatch.”

The bank continued in operation till the establishment of the Bank of North America, December 31, 1781, and was the first banking institution in America.

The plan for the bank for the Government was approved by the Continental Congress, May 26, 1781, and this financial agent of the Government was chartered by the Congress December 31, 1781. The capital stock was divided into shares of $400 each, in money of gold and silver, to be procured by subscriptions.

Twelve directors were appointed to manage the affairs of the bank, which was entitled by the Congress “The President, Directors and Company of the Bank of North America.”

Alexander Hamilton, observing the prosperity and usefulness to the commercial community and the financial operations of the Government of the Bank of North America, in Philadelphia, and of the Bank of New York, and the Bank of Massachusetts, which were afterward established, and which three banks held the entire banking capital of the country before 1791, recommended the establishment of a Government bank in his famous report on the finances (1790), as Secretary of the Treasury.

Hamilton’s suggestion was speedily acted upon, and an act for the purpose was adopted February 8, 1791.

President Washington asked the written opinion of his Cabinet concerning its constitutionality. They were equally divided. The President, believing it legal, signed the bill.

The bank was named “The United States Bank” and its charter limited to twenty years.

This bank was soon established, with a capital of $10,000,000, of which amount the Government subscribed $2,000,000 in specie and $6,000,000 in stocks of the United States.

The measure was very popular. The shares of the bank rose to 25 and 45 per cent premium, and it paid an average dividend of 8½ per cent on its capital. The shares were $400 each, same as the Bank of North America.

The United States Bank was chartered February 25, 1791, and established at Philadelphia, with branches at different points. Its charter expired without renewal March 4, 1811.

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