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What Was The Role Of The First Bank In The 1800s

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In 1791, the United States was in debt (due to the Revolutionary War) and each state had a different form of currency. Treasury Secretary, Alexander Hamilton urged the congress to establish the First Bank of the United States in 1791. Alexander created this bank to assist the states in paying their debt from the war and to aid the government in its financial transactions. The First Bank was the largest corporation in the United States and at the time big banking unnerved many Americans. The First Bank of the United States issued paper money to pay any debts owed to the government and taxes.
By 1811, the twenty-year charter for the First Bank was up and with one vote; congress voted it out.
Later, the war of 1812 left the country in the same disposition and the Second Bank of the United States was created in 1816. President James Madison signed the bill for the second bank with a charter for twenty years. When the 20-year charter came to an end President Andrew Jackson vetoed it in 1832. The Second Bank of the United States expired in 1836.
State banks and free banks began to print their own notes after the Second Bank of the United States failed. In 1837 the Free Banking Era began, banks could open with minimum requirements and soon failed and their notes became …show more content…

During the Free Banking era, the National Banking Act of 1863 was passed. The National Banking Act of 1863 had three goals create a national form of currency, finance the civil war and create national banks. An amendment to that act the state bank notes were taxed but not the federal notes. This amendment was set to create one currency for the entire nation. The National Banking Act did not solve the financial issues in the United States. The amendment did eventually drive most state banks out of business with the 10 percent federal tax that was issued in 1865 leaving only 325 state banks and 1,638 national

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