First Bank of the United States

First Bank of the United States Definition

The First Bank of the United States was proposed by Alexander Hamilton to relieve the war debt from the United States Revolutionary War, develop a national currency, and dispose of the western territories. Housed in Philadelphia, Pennsylvania (in Carpenter's Hall for several years) when that city was the capital, it was chartered in 1791 for 20 years, and thus expired in 1811. It followed the Bank of North America and it was succeeded by the Second Bank of the United States.

The establishment of the Bank raised early questions of constitutionality in the new government. Hamilton, then Secretary of the Treasury, argued that the Bank was an effective means to achieve the authorized powers of the government. Secretary of State Thomas Jefferson argued that the Bank violated traditional property law and that its relevance to constitutionally authorized powers was weak.

Tenets the bank was based on include:

1. Sound finance, with a balanced government budget deficit, except during wartime emergency
2. Sound banking, with reserves in gold
3. Lender last resort availability
4. The currency notes issued could serve as instruments of national policy