The Congress drafted the First Bank of the United StatesÆ charter in 1791. The creation of the Bank was necessary for several reasons. Among them was the fact that the United States government needed to issue currency. It also needed a mechanism to receive payments such as taxes and to make payments. Also, the federal government had incurred a significant amount of debt during the Revolutionary War and needed a bank as a mechanism to repay this debt. Alexander Hamilton, the first Secretary of the Treasury, realized that the nation could not grow and prosper without a sound financial system. For example, up to the time of the Bank's charter, various types of coins and bills issued by state banks served as currency around the country.
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 opposition against the proposal. Kenneth Bowling (1972) writes that in February 1791, Congress passed the Bank bill, but President George Washington, who still considered himself mediator between conflicting factions, wished to be certain of its Constitutionality before signing it. In a strong argument, Jefferson advocated the doctrine of strict construction or interpretation of the Constitution. Jefferson maintained that the Bank bill was unconstitutional. Jefferson stated that the incorporation of a ...