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Bankers I : Bankers of
the Early Republic
Banking was another economic sector which became increasingly popular among
America’s merchants, both as a lucrative activity and as a well yielding
investment. It was virtually unknown in North America during the colonial
times, when the local economy was dominated by the large landowners and
trade of the colonies was controlled and regulated by England. Although the
Colonies issued notes, notably to finance military campaigns, and land banks
existed, where bills of credit could be obtained, using land as collateral,
the real need for American banks emerged when the nation gained its
independence.
When it faced the dilemma of financing Washington’s vital Continental Army
to fight the revolutionary war, with no sources of income other than the
contributions of the states, the Continental Congress, which acted as
interim government of the new nation, issued notes and bills of credit in
increasing quantities. Although after Washington’s victory over Lord
Cornwallis at Yorktown, peace and independence seemed finally assured, the
new nation was virtually bankrupt and its paper money worthless, when Robert
Morris was appointed Superintendent of Finance in 1781, a position which
along with his already extensive business interests, made him America’s
foremost financier. Along with Jewish bond broker Haym Salomon and other
wealthy Philadelphians, he formed the Bank of North America, the country’s
first bank and reestablished the Nation’s credit overseas. Although they
were the nation’s most influent financiers, and built huge private estates
in the process, both Robert Morris and Haym Salomon were eventually ruined
by the weakness of the US credit or the under-performance of its economy
against their bold anticipations.
In as far as the Bank of North America was created with a large subscription
by the US government out of a loan from France, it was a forerunner of the
First Bank of the United States, which followed in 1791 with a twenty year
charter and a capital of $ 10 million. The Bank of North America later
received a state charter from Pennsylvania and after the government sold its
shares, it remained one of many commercial banks, was rechartered as a
national bank under the National Currency Act of 1964 and was acquired by a
life insurance company in 1929. Other state chartered banks were created in
the meantime, including the Bank of Massachusetts and the Bank of New York.
The latter was organized by members of the then leading Federalist party in
New York, including Alexander Hamilton and his father-in-law Philip
Schuyler. Isaac Roosevelt, a wealthy sugar refiner and ancestor of Franklin
Delano Roosevelt, was president of this bank.
Bankers I > Index
and Introduction :
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