Bank of North America

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Bank of North America
Location: United States 1782-, Canada 1837-
First President: Thomas Willing
Existed: 1782-
Merged into modern day Wells Fargo
Three pence issued by the Bank of North America 6 August 1789. Printed by Benjamin Franklin Bache on marbled paper obtained by Benjamin Franklin.[1]

The President, Directors, and Company, of the Bank of North America, commonly known as the Bank of North America, was a private business chartered on May 26, 1781,[2] by the Confederation Congress and opened on January 4, 1782, at the prodding of Superintendent of Finance Robert Morris.[3][4] This was thus the nation's first de facto central bank.[5] When shares in the bank were sold to the public, Bank of North America became the country's first initial public offering.[6] It was succeeded in its role as central bank by the First Bank of the United States in 1791.

Congress have wisely appointed a superintendent of their finances,—a man of acknowledged abilities and integrity, as well as of great personal credit and pecuniary influence.

It was impossible that the business of finance could be ably conducted by a body of men however well composed or well intentioned. Order in the future management of our moneyed concerns, a strict regard to the performance of public engagements, and of course the restoration of public credit may be reasonably and confidently expected from Mr. Morris' administration if he is furnished with materials upon which to operate—that is, if the federal government can acquire funds as the basis of his arrangements. He has very judiciously proposed a National Bank, which, by uniting the influence and interest of the moneyed men with the resources of government, can alone give it that durable and extensive credit of which it stands in need. This is the best expedient he could have devised for relieving the public embarrassments, but to give success to the plan it is essential that Congress should have it in their power to support him with unexceptionable funds. Had we begun the practice of funding four years ago, we should have avoided that depreciation of the currency which has been pernicious to the morals and to the credit of the nation, and there is no other method than this to prevent a continuance and multiplication of the evils flowing from that prolific source.
- 'The Continentalist' No. IV, August 30, 1781

Congressional Charter[edit]

In May 1781 Hamilton revealed that he had recommended Morris for the position the previous summer when the constitution of the executive was being solidified. Second, he proceeded to lay out a proposal for a National Bank. Morris, who had corresponded with Hamilton previously (1780) on the subject of funding the war, immediately drafted a legislative proposal based on Hamilton's suggestion and submitted it to the Congress. Morris persuaded Congress to charter the Bank of North America, the first private commercial bank in the United States.[7]

1782 Inauguration[edit]

When Robert Morris became superintendent of finance in February 1781,[8] continental currency had ceased to be issued. On April 30, 1781, Alexander Hamilton sent Morris a letter. The original charter called for the disbursement of 1000 shares priced at $400 each.[9] Benjamin Franklin purchased one share for 0.1% ownership as a sign of good faith to Federalists and the new bank. Meanwhile, Hamilton made public endorsement of the establishment under his pseudonym:[10]

Public Offering[edit]

William Bingham's first daughter, Ann Louisa Baring was born the day before the bank opened, and her father purchased 9.5% of the shares for himself.[11] She was also the granddaughter of Thomas Willing, a primary shareholder and the original President of the bank offices at Philadelphia. Using a gift/loan from France, Robert Morris purchased 63.3% of the original shares for the government.[9] Robert Morris deposited large quantities of gold and silver coin and bills of exchange obtained through loans from the Netherlands and France. He then issued new paper currency backed by this supply.

By 1783, Congress and several states including Massachusetts enacted legislation, allowing Americans to pay taxes with Bank of North America certificates.[12] Within three years, the Bank was considered a creditworthy institution.

Bank of Pennsylvania[edit]

After a change of party in Pennsylvania's legislature in 1786 the Bank of North America was re-chartered within the Commonwealth in 1787, but under more restrictive conditions that would hinder it from performing its intended role as a central bank.[13]

John Nixon was the first director of the Bank of Pennsylvania. Morris subscribed 10,000 pounds sterling to fund it. It was not a bank in the ordinary sense but an organization formed for the purpose of financing supplies for the army. In 1782, the Bank of North America superseded the Bank of Pennsylvania.[14] Serving from 1792 to 1808, Nixon succeeded the first president of the Bank of North America, Thomas Willing, who went on to become the first president of the First Bank of the United States. Nixon was in turn succeeded by John Morton, who served as President until 1822. William Frederick Havemeyer was its president from 1851 to 1861 and brought it successfully through the crisis of 1857. After it had become a National Bank in 1865, a president of the same name presided over its liquidation in 1908.[15]

The Bank of Pennsylvania was re-established in 1793, with a charter from the Commonwealth of Pennsylvania, and branches were opened in Pittsburgh, Harrisburg, Lancaster, Reading, and Easton.[16] The original branch of the Bank of Pennsylvania remained in business in Pennsylvania through the 19th and 20th centuries under a variety of other names including First Pennsylvania Bank and, before its acquisition by Wells Fargo, Wachovia, First Union Bank and CoreStates, operated under national bank charter #1.[citation needed] Wachovia (as of November, 2012) operated a branch at the northwest corner of S. 6th and Chestnut Sts. in Philadelphia, diagonally opposite Independence Hall, which was the original site of the Bank of North America.[citation needed] This branch is the longest continuously operating branch bank in the United States, operating in that location since 1781.[citation needed] Ironically, Wachovia merged in 2001 with North Carolina's First Union Bank, which also numbers among its predecessors the Bank of North America.[citation needed] Following Wells Fargo's acquisition of Wachovia, Wells Fargo adopted Charter #1.[17]

Precedence[edit]

The Bank of North America along with the First Bank of the United States and The Bank of New York obtained the first shares in the New York Stock Exchange. The Bank of North America opened a Canadian affiliate in Montreal on March 8, 1837.[18]

See also[edit]

References[edit]

  1. ^ Newman, Eric P. (2008) The Early Paper Money of America. 5th edition. Iola, Wisconsin: Krause Publications. p. 364.
  2. ^ Continental Journal (Boston, MA). "Plans for Establishing a National Bank." June 21, 1781. 1
  3. ^ Continental Journal (Boston, MA). "Plans for Establishing a National Bank." June 21, 1781. 2
  4. ^ Curtis P. Nettels, The Emergence of a National Economy, 1775-1815 (1962) p 32
  5. ^ Jerry W. Markham (2002). A Financial History of the United States. M.E. Sharpe. p. 87. 
  6. ^ http://www.moaf.org/exhibits/americas_first_ipo/index
  7. ^ A History of Banking in the United States. By John Jay Knox, Bradford Rhodes, Elmer Haskell Youngman. p.40.
  8. ^ Bradbury, M. L. "Legal Privilege and the Bank of North America." The Pennsylvania Magazine of History and Biography 96, no. 2 (March 1972):139-66.7
  9. ^ a b ALBERTS, ROBERT C. (1969). The Golden Voyage. Houghton Mifflin Company. p. 106. 
  10. ^ The Papers of Alexander Hamilton, Harold Syrett, editor
  11. ^ Birthdate: 6th of January 1781
  12. ^ ALBERTS,, ROBERT C. (1969). The Golden Voyage. Boston: Houghton Mifflin Company. p. 111. 
  13. ^ Goddard, Thomas H. (1831). History of Banking Institutions of Europe and the United States. Carvill. pp. 48–50. 
  14. ^ Kaplan, Edward S. (1999). The Bank of the United States and the American Economy. Greenwood Publishing. pp. 11–12. 
  15. ^ "Bank of N. America is to liquidate". The New York Times. January 27, 1908. 
  16. ^ Klein, Philip Shriver; Ari Hoogenboom (1973). A History of Pennsylvania. Penn State Press. p. 223. 
  17. ^ Meng, Henrik (June 14, 2010). "The end of one era and continuation of another". Wells Fargo. Archived from the original on July 20, 2011. 
  18. ^ Pound, Richard W. (2005). 'Fitzhenry and Whiteside Book of Canadian Facts and Dates'. Fitzhenry and Whiteside. p. 188. 

External links[edit]