Congress Establishes the First Bank of the United States

Detail, print showing street scene in 1800 with buildings on either side.
The debates over establishing the First Bank of the U.S. took place in Congress Hall, the red brick building on the left with the balcony.

Detail, Congress Hall and New Theatre, in Chestnut Street, Philadelphia. By William Birch, 1800. New York Public Library Digital Collections,

The legislation establishing the first Bank of the United States generated controversy from the outset. Some congressmen, particularly from the south, voiced concerns over elitism, encroachment on state's rights, and unconstitutionality. However, the bill passed both houses of Congress by February 8, 1791. President Washington signed the Bank of the United States into law on February 25, 1791.

What did Secretary of the Treasury Alexander Hamilton's "Report on a National Bank" provide for? What were the debates in Congress about?

"Report on a National Bank"

"...most commercial nations have found it necessary to institute banks..." -- Alexander Hamilton to Robert Morris, April 30, 1781

Alexander Hamilton identified the need for a central bank during the Revolutionary War. Ten years later, President Washington appointed Hamilton the first Secretary of the Treasury. In his "Report on a National Bank" (also known as the "Second Report on Public Credit"), Hamilton called for a national bank with $10 million in capital and currency acceptable for payment of federal taxes. This bank would serve both the government and private citizens.

As the federal government's fiscal agent (although not an actual government institution), the Bank would:
  • collect tax revenue through a branch network
  • secure the government's funds
  • loan funds to the government in times of need
  • move money around the nation through a branch network
  • pay the government's bills
Private citizens and foreign interests could make deposits and take out loans from the Bank of the United States.

Debates in Congress

A number of financial bills came before Congress in winter/early spring 1791. In addition to the Bank bill, the House of Representatives and the Senate debated bills to establish the U.S. Mint and to impose an excise tax on distilled spirits. Dissent existed over the direction of the nation's economy. In the case of the bill to establish a national bank, the debates reflected a concern over northern financiers having too much power. For some Bank opponents, attacking the constitutionality of the Bank appeared to be a more promising angle in a Federalist-dominated Congress.

The Senate

"An aristocratick influence subversive of the spirit of the free, equal government." -- Senator Pierce Butler to Congressman James Jackson, January 24, 1791

The 26 senators met on the second floor of Philadelphia's Congress Hall, the national capitol building from 1790 to 1800. They had no public gallery and little is known of their debates on the first Bank of the United States. Introduced in late December 1790, the Bank bill passed on January 20, 1791 by voice vote with no record of the individual votes. Given their opposition to the bill, it's likely that Senators Pierce Butler (SC) and William Maclay (PA) were among those who voted against it. Butler called out the bank as elitist and Maclay feared that the Bank would concentrate wealth in the hands of the few, noting in his Journal the need to prevent the establishment of a "machine for the purposes of bad ministers."

The House of Representatives

"Congress may do what is necessary to the end for which the Constitution was adopted..." -- Congressman Fisher Ames in a speech, February 3, 1791

Consideration of the Bank bill began on the floor of the House on February 1, 1791. Congressman James Jackson (GA) believed that the Bank would advantage merchants over farmers, stating "...the plan of a National Bank is calculated to benefit a small part of the United States - the mercantile interest..."

Congressman James Madison (VA) expanded on Jackson's argument, saying that the proposed National Bank "...would directly interfere with the rights of the states to prohibit as well as establish Banks, and the circulation of [state] bank notes." Madison also attacked the Bank's constitutionality by asking, "Is the power of establishing an incorporated Bank among the powers vested by the Constitution in the Legislature of the United States?"

Defenders in the House chamber, like Congressman Fisher Ames (MA), stressed how the Bank would improve trade and make tax collection more efficient. Ames also affirmed the constitutionality of the Bank of the United States, arguing that Congress had the power to make laws implied, though not explicitly expressed, in the U.S. Constitution.

The bill passed the House by a vote of 39-20 on February 8, 1791. Of the 39 Representatives in favor of establishing the Bank, 33 were from the north and 6 were from the south. Almost all of the bill's opponents were from the south.

President Washington and Executive Signature

"... that I may be fully possessed of the arguments for and against the measure, before I express any opinion on my own, I give you an opportunity of examining & answering the objections..." -- George Washington to Alexander Hamilton, February 16, 1791

The bill moved on to President Washington for executive signature. Some Congressmen and government officials urged President Washington to sign the first Bank into law. Others implored him to veto the bill. Secretary of State Thomas Jefferson expressed his opposition to the Bank. Attorney General Edmund Randolph also pronounced the measure to be unconstitutional. Washington passed the arguments on to Secretary of the Treasury Alexander Hamilton, asking him for his opinion. Hamilton worked furiously on his defense of the Bank, reporting that it "...occupied him the greatest part" of the night.

Hamilton's defense persuaded Washington to sign the bill into law on February 25, 1791. The loose construction of the U.S.Constitution prevailed in this instance, but the battle over the interpretation of the nation's framework of government continues to the present day.

Cowen, David J. The Origins and Economic Impact of the First Bank of the United States, 1791-1797. New York and London: Garland Publishing, 2000.

Dellinger, Walter and H. Jefferson Powell. “The Constitutionality of the Bank Bill: The Attorney General's First Constitutional Law Opinions,” Duke Law Journal, October 1994.

Klubes, Benjamin B. “The First Federal Congress and the First National Bank: A Case Study in Constitutional Interpretation,” Journal of the Early Republic, Spring 1990.

Lomazoff, Eric. Reconstructing the National Bank Controversy: Politics and Law in the Early American Republic. New York: University of Chicago Press, 2018.

Morgan, H. Wayne. “The Origins and Establishment of the First Bank of the United States,” The Business History Review, December 1956.

Wettereau, James O. “New Light on the First Bank of the United States,” The Pennsylvania Magazine of History and Biography, July 1937.

Hamilton Grange National Memorial, Independence National Historical Park

Last updated: December 16, 2021