The First Bank of The United States

The First Bank of the United States is historically significant because the institution provoked the first great debate over a strict, as opposed to an expansive interpretation of the Constitution. In adopting Hamilton's proposal and chartering the Bank, both the Congress and the President took the necessary first steps toward implementing a sound fiscal policy which contributed to the continuing growth of the economy of the United States. Benjamin Klubes (1990) writes that many members of Congress attacked Hamilton's proposal to charter a National Bank on constitutional grounds asserting that the Constitution made no specific provisions for the creation of such an institution. James Madison led the opposit

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on the government including a ready source of loans, a principal depository for federal monies, which were transferable from city to city without charge, and a clearing agent for payments on the national debt. The government, as the largest stockholder, shared in the profits, but had no direct control or authority to manage the activities of the Bank. In this sense, the role of First Bank of the United States is similar to the role of the U.S. Federal Reserve Bank. The First Bank of the United States stimulated the economy and enhanced the shaky credit standing of the federal government. The BankÆs notes circulated countrywide. They became a safe medium of exchange. Within a few years of its founding, the volume of deposits, loans, transfers and payments transacted by the Bank made it the single largest enterprise in the nation. The Bank also performed certain functions that today are associated with Federal Reserve Bank or any nationÆs Central Bank. For example, the First Bank of the United States attempted to regulate state banks by restraining those banks that had over issued bank notes creating an inflationary effect. Also, in coordination with the Treasury department, the Bank discussed economic conditions and attempted to
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Approximate Word count = 1277
Approximate Pages = 5 (250 words per page)

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