LeoGlossary: First Bank of the United States
The First Bank of the United States was the country's first attempt at a central bank. This was another one of the Hamilton banks, the vision of Alexander Hamilton. It followed on the footsteps of the Bank of North America.
Even though it can be seen as an attempt at a central bank, it really wasn't. It was chartered as a national bank, with a 20 year term. That took place in 1791.
The bank was established to serve as a repository for federal funds and as the government’s fiscal agent.
We can now see the main differences between the national bank and a central bank. These were not part of the First Bank of the United States:
- setting monetary policy
- regulating of private banks
- holding excess reserves
- being the lender of last resort
The bank did have branches in multiple states which made it national. Others at the time only operated in a single state.
Hamilton, who was Secretary of the Treasury, believed a national bank was necessary to stabilize and improve the nation's credit, and to improve handling of the financial business of the United States Government.
The charter was not approved after the term expires in 1811. At that time, the rest of the stock was sold off to Stephen Girard, which later became Girard bank.
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