Issues that faced the first and second banks of the Us. The first us bank . Alexander Hamilton was the first secretary of treasury. Chartered in 1790’s The Bank of the United States was established in Philadelphia, Pennsylvania
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Shortly after Hamilton proposed the creation of a National Bank for the U.S. a bill was introduced into Congress to accomplish Hamilton's proposal. There was major opposition to the bill on the grounds that creation of such a bank with a control on issuing money was unconstitutional. The bill passed and was signed into law in 1791 but it provided only a twenty year charter for the Bank of the United States. The charter would need to be renewed in 1811.
The Bank of the United States solved many of the financial problems that troubled the country before 1791. But the Bank of the United States was a private institution and foreign buyers purchased ownership shares of the bank until the 70 percent of the bank was owned by foreigners. This worried American politicians but this high share of foreign ownership was not unusual in the American financial system. Britain had been supplying capital to the U.S. economy for some time.
Under Jones the Bank opened branches in many other cities and expanded operations
Other banks resented the competition from this Federally supported institution. It was taking business away from them. Two state governments tried to prohibit the establishment of branches of the Bank of the United States in their states and six others tried to levy prohibitive taxes on these branches to discourage their operation. It took a ruling by the U.S. Supreme Court to prevent these restrictions being imposed on the Bank of the United States
It took a ruling by the U.S. Supreme Court to prevent these restrictions being imposed on the Bank of the United States. Chief Justice John Marshall in 1819 ruled that the Bank of the United States was a needed instrument of the United States Government for carrying out its fiscal operations. One can clearly see the problems of mixing public and private institutions. The Bank of the United States may have been a necessary instrument for fiscal operations of the U.S. government but it was also a private commercial bank.
The branches of the Second Bank were not closely controlled by the main Philadelphia institution and the Baltimore branch came under the control of individuals who stole a million dollars before they were caught. The Baltimore branch went into receivership and the whole Bank was close to bankruptcy. William Jones resigned in January of 1819.