SECOND BANK OF THE UNITED STATES.
Early in 1814 proposals were made to or ganize a national bank, and on 10 February of that year a bill was introduced in the House for the incorporation of such an institution with a capital of $30,000,000, but the bill failed, and other attempts were unsuccessful also, until finally a bill based upon the suggestions of Mr. Dallas, the Secretary of the Treasury, be came a law by the signature of President Madi son 10 April 1816.
Mr. Dallas on 6 Dec. 1815, sent to the speaker of the House a proposition relating to the national circulating medium. He consid ered four questions: Whether it was practicable to renew the circulation of gold and silver coins; whether the State banks could be suc cessfully employed to furnish a uniform cur rency; whether a national bank would be more advantageously employed for the purpose; and, last, whether the government itself could sup ply and maintain a paper medium of exchange. In regard to the State banks, while acknowledg ing the valuable services and liberality of some of them, he said: "The truth is, that the char ter restrictions of some of the banks, the mutual relation and dependence of the banks of the same State, and even of the banks of the differ ent States, and the duty which the directors of each bank conceive they owe to their immediate constituents upon points of security or emolu ment, interpose an insuperable obstacle to any voluntary arrangement upon national considera tions alone for the establishment of a national medium through the agency of the State banks." He concluded against the possibility of specie alone, against government issues, and finally that a national bank was the best and perhaps the only resource. At the request of the Na tional Currency Committee of the House, Mr. Dallas, on 24 Dec. 1815, enclosed an outline of a plan for a national bank. He proposed now a bank for 20 years with a capital of $35,000,000. $7,000,000 of which was to be subscribed by the government. This might be augmented to $50,000,000 by Congress, the increase to be di vided among the States. It was to be located in Philadelphia, and could establish branches or employ State banks as branches. It was to pay specie at all times, and not to suspend without authority of Congress. In lieu of the loan, it was to pay the government a bonus of $1,500,000.
A bill was introduced embodying Mr. Dal las' suggestions on 26 Feb. 1816. The debate was chiefly upon a motion to reduce the capital to $20,000,000. In this debate Mr. Clay spoke in favor of the bank. Two reasons he gave for changing his position were that, in 1811, when he voted against the recharter of the old bank, he was instructed by the legislature of his State to do so, and at that time he did not deem a national bank as necessary in a consti tutional sense. He then relied upon the State banks as being able to meet all the wants of the government financially; it now appeared that the general government could no longer d'epend upon them. A national bank seemed
to him now not only neceSsary, but indispensable. At one time Philadelphia was struck out and New York selected as the principal seat of the bank by a vote of 70 to 64, but this was re considered and Philadelphia replaced. The bill finally passed the House without important amendment, on 14 March 1816, by a vote of 80 to 71. It was introduced in the Senate on 22 March and passed on 3 April with one or two amendments that, when the bill came to the House next day, Mr. Calhoun pronounced to be slight Upon 5 April they were concurred in and on 10 April the bill received President Madison's signature.
Provisions of the The charter was limited to 20 years, expiring on 3 .March 1836. The capital was fixed at $35,000,000, $7,000,000 of which was to be subscribed by the government, payable in coin or in stock of the United States, bearing interest at 5 per cent and redeemable at the pleasure of the govern ment. The remaining stock was to be sub scribed for by individuals and corporations, one-fourth being payable in coin and three fourths in coin or in the funded debt of the United States. Five of the directors were to be appointed by the President, and all of them were required to be resident citizens of the United States, and to serve without compen sation. The amount of the indebtedness, ex clusive of deposits, was not to exceed the cap ital of the bank. The directors were empow ered to establish branches, and the notes of the bank, payable on demand, were receivable in all payments to the United States. The penalty for refusing to pay its notes or deposits tn coin, on demand, was 12 per cent per annum until fully paid. The bank was required to give the necessary facilities, without charge, for trans ferring the funds of the government to differ ent portions of the Union and for negotiating public loans. The moneys of the govenunent were to be deposited in the bank and its branches, unless the Secretary of the Treasury should otherwise direct. No notes were to be issued of a less denomination than $5, and all notes smaller than $100 were to be made payable on demand. The bank was not directly or indirectly to deal in anything except bills of exchange, gold or silver bullion, goods pledged for money lent, or in the sale of goods really and truly pledged for loans, or of the proceeds of its lands. No other bank was to be established by authority of Congress during the continuance of the corporation, except such as might be organized in the District of Columbia with an aggregate capital not ex ceeding $6,000,000; and, in consideration of all the grants of the charter, the bank was to pay to the United States a bonus of $1,500,000 in three annual instalments.