Thanks to the power of musical theater and the genius of Lin-Manuel Miranda, I can now speak in public spaces about Alexander Hamilton and the First Bank of the United States without watching people’s eyes glaze over in real time. And I am duly grateful. But there is a preceding chapter to this story, which Matthew Wells tells in “The Bank of North America,” subtitled “Before the First Bank of the United States, another, less well-known institution helped the fledgling United States find its financial footing (Econ Focus: Federal Reserve Bank of Richmond, Third Quarter 2026). Wells sets the stage:
The nascent country’s financial situation was a major source of uncertainty. The weak and decentralized federal government created under the 1777 Articles of Confederation, along with the states, carried a debt burden of at least $70 million, owed to domestic lenders, as well as Dutch banks and the French and Spanish governments. To put the debt in context, the colonial GDP prior to the war was about $170 million. After five years of war, that number was undoubtedly much lower, possibly making the new country’s cumulative debt equal to a significant portion of its annual economic output. To make matters more complex, the U.S. currency was all but worthless thanks to the Second Continental Congress’ decision to finance the war by just printing money without the necessary gold or silver specie to back it (giving rise to the expression that items of little or no value were “not worth a Continental”).
Hamilton’s First Bank of the United State began operation in 1791. But a decade earlier in 1781, the Congress chartered the Bank of North America, which began operations in 1782. Hamilton was a strong supporter of this earlier bank. The basic goal of this “bank” was to centralize federal borrowing: that is, the Bank of North America would start off by purchasing all national debt, and then reselling it through an organized market. As Wells writes:
Hamilton was committed to the idea of a national bank well before the end of the [Revolutionary] war. … [I]n a series of essays, … he called for the United States to adopt such an institution to act as the country’s fiscal agent, supplying funding to the government, handling its accounts, and managing its debt. … The national bank would also put forward a new, stable currency, as the Continental dollar had fallen to below one-eighth of its original value by the end of 1779 and would fall further still. Through prudent financial administration, Hamilton believed it would be able to pay off any war debt in just a few decades, making it “a national blessing … [a] powerfull [sic] cement of our union.”
Wells tells the step-by-step story of how the Bank of North America established itself, and thus came to serve as a testing ground and predecessor for Hamilton’s later and more famous bank. The original president of the Bank of North America, Thomas Willing, would also be the first president of the First Bank of the United States. For a few years in the early 1780s, it worked pretty well. Wells writes:
During this time, the bank performed its key operations, allowing the nation to begin finding its financial footing. Most importantly, it extended short-term loans to the federal government (as well as to Pennsylvania) for payroll, supply contracts, and debt servicing. It even loaned Philadelphia money to light the city’s streets and feed its citizens who could not afford food. These governments could then repay the bank whenever they received revenue, which allowed them greater flexibility and the chance to avoid default. … The circulation of a stable national currency also brought confidence to the new country’s financial system. The national government and the states could all conduct transactions, including taxation, without the frictions that came with the different actors having to determine the value of competing and overlapping currencies.
But the Bank of North America was also deeply controversial, often in ways that have an echo in modern arguments. For example, no less an authority than James Madison argued that creating the Bank of North America exceeded the power of Congress, but he was outvoted. (Remember, at this time the US Constitution had not yet been written.) There were complaints that the bank charged interest rates that were too high, and that the internal workings of the bank were entangled with conflicts of interest and foreign money. Wells summarizes the (not unfounded!) complaints of the critics: “Characterizing the bank as the root of most economic problems, they accused it of favoritism, extortion, and undue commercial and political influence. They also argued it engaged in systematic usury, leading many borrowers to financial ruin …”
The state of Pennsylvania revoked the bank’s state-level charter in 1785, then reinstated it in 1787. The bank’s national charter expired in 1789 with the end of the “Conferation Congress” of that decade and the start of the US Congress. The Bank of North American continued to operate as a Pennsylvania-chartered commercial bank under that name up through 1929, and after a series of mergers over the decades, it became part of Wells Fargo in 2008.
