Bank of North America

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The Bank of North America was chartered on December 31, 1781 by the Congress of the Confederation and opened on January 7, 1782, at the prodding of Superintendent of Finance Robert Morris. This was thus the nation's first de facto central bank,^{[citation needed]} following in the footsteps of the Bank of England until 1785, when the Bank’s charter within the Commonwealth of Pennsylvania was revoked. It was succeeded in its intended role by the First Bank of the United States in 1791. 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.^{[citation needed]}

After Robert Morris became superintendent of finance in May 1781, continental currency had ceased to be issued. Earlier, on April 30, 1781, Alexander Hamilton, then only twenty-three years old and still serving in the military, had sent Morris a letter. First, 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.^[1]

Meanwhile, Hamilton made public endorsement of the establishment under his pseudonym:^[2]

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

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. He also managed to meet the interest obligations on the debt which he estimated to be about thirty million dollars. Accordingly, Thomas Goddard has called him "the father of the system of credit, and paper circulation, in the United States." Although able to operate nationwide, the Bank of North America primarily operated in three states, and in 1785 it lost its central bank status in Pennsylvania due to objections of "alarming foreign influence and fictitious credit", favoritism to foreigners and unfair competition against less corrupt state banks issuing their own bills of credit, such that Pennsylvania's legislature repealed its state charter on 13 September 1785. 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.^[3]

[edit] Bank of Pennsylvania

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.^[4] 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. 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.^[5]

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.^[6] 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 Wachovia, CoreStates, and through this acquisition Wachovia operates under national bank charter #1. ^[7] Wachovia still operates a branch at the northwest corner of 6th and Chestnut in Philadelphia, which was the original site of the Bank of North America. 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.^[8]

[edit] References

[edit] See also

• Congressional charter
• First Union Corporation