Treasury Secretary Alexander Hamilton submitted his Report on a National Bank to Congress, arguing that a national bank could help stabilize public credit and support federal finances. The proposal quickly became a major early test of how broadly Congress could use its powers under the Constitution.
Congress passed the bank bill, and President George Washington signed it into law, creating the Bank of the United States with a 20-year charter. The debate surrounding the law sharpened the early divide between those favoring a strong national government and those favoring a narrower reading of federal power.
To launch the new bank, Washington appointed commissioners to oversee the opening of subscriptions for the bank’s capital stock. This step moved the project from law to operations by setting up how private investors and the federal government would fund the institution.
The Bank of the United States opened for business in Philadelphia, initially operating from Carpenters’ Hall. It served as a fiscal agent for the federal government—handling deposits and payments—while also acting as a major commercial bank whose notes circulated widely as money.
Branches opened in Boston, New York, Charleston, and Baltimore, extending the bank’s reach beyond Philadelphia. This branch system helped connect federal revenue collection and credit to key commercial centers, increasing the bank’s influence on lending and payments.
With $10 million in capitalization—large for the era—the bank became a centerpiece of Hamilton’s financial program. By managing government funds and interacting with state-chartered banks, it contributed to more predictable public credit and helped regulate credit conditions indirectly through its lending and note practices.
The bank’s permanent building in Philadelphia was completed, giving the institution a prominent physical presence in the nation’s early capital. The structure later became an important historic site, reflecting how central the bank’s role had become in national public life and finance.
A branch opened in Norfolk, Virginia, as the bank continued extending services to new regions. This expansion supported federal transactions and commercial lending in areas where trade and customs revenue were increasing.
Branches opened in Savannah and in the new federal city of Washington, D.C., reflecting the nation’s shifting political geography and expanding economy. These offices helped the bank remain relevant as the seat of government moved and trade networks spread.
The bank opened a branch in New Orleans, linking the national bank system to a fast-growing port at the mouth of the Mississippi River. This move supported commerce and federal finance in a region that had become strategically important to U.S. trade after the Louisiana Purchase.
As the charter neared expiration, Treasury Secretary Albert Gallatin recommended renewing it, arguing the bank was useful for federal finances. The issue reopened earlier constitutional and political disputes, now intensified by the growth of state banks that viewed the national bank as a competitor.
In the House of Representatives, the bank’s charter renewal was defeated by a narrow margin. The close vote showed how divided Congress remained over the proper role of a national bank and the balance between federal and state financial power.
The Senate vote on renewal ended in a tie, and Vice President George Clinton cast the deciding vote against rechartering. This result effectively ensured the national bank would close when its charter term ended.
The First Bank’s 20-year charter expired, and it was wound down rather than renewed. The loss of a national fiscal agent left the federal government more dependent on state banks and other arrangements—an outcome that later shaped debates during the financial strains leading into the War of 1812.
The First Bank of the United States: Establishment to Charter Expiration (1791–1811)