As some doubt existed as to the validity of a charter from Congress, the bank applied to and received one from the state of Pennsylvania. After the close of the war the bank did a prosperous business, earning dividends as high as 14 per cent. These tempting gains prompted the starting of another bank, but the Bank of North America prevented competition by absorbing the new institution, thereby increasing its capital stock to $830,000. Some dissatisfaction arose among the "debtor class" of the bank's customers on account of the bank's practice of requiring its paper to be promptly met at maturity, and the legislature was petitioned to annul its charter, urging "usury, extortion, favoritism, harshness to debtors and the possession of undue political and commercial influence. Strange as it may seem, the petition was granted and the charter annulled in 1785. The bank continued to do business under its governmental authority, and in 1787 the legislature of Pennsylvania repented of its former ill considered action and renewed the charter. When Alexander Hamilton took charge of the government finances in 1790 he was opposed to continuing the Bank of North America as a government agent, claiming that its state charter virtually annulled its national one, and made the bank a state institution. Washington and Congress seemed to accept this view, and abandoned all government connection with the bank. It continued to do business as a state bank until the organization of our national banking system, when it entered the list as a national bank. By a special dispensation, in view of its illustrious origin, it was permitted to qualify under the national banking law, without changing its name, and so continues to the present time a venerable and useful institution, the oldest bank in the United States. Between 1782 and 1790, the Bank of North America had been the depository of the government funds, had collected and disbursed the revenues, and performed most of the functions which are now performed by the government treasury, but in his report of December 13, 1790, Hamilton strongly recommended the organization of a United States Bank large enough and strong enough to furnish a uniform and stable currency as well as to properly perform the duties of financial agent. In this he took the ground that the government should not issue paper money directly, but that a great bank, strong enough for the purpose, should make such issue subject to governmental restrictions. Hamilton understood the functions of a bank and saw how it served as a manufactory of credit. He said:

"Every loan which a bank makes is, in its first shape a credit given to the borrower on its books, the amount of which it stands ready to pay, either in its own notes, or gold or silver at his option. But, in a great number of cases, no actual payment is made in either. The borrower, frequently, by check or order, transfers his credit to some other person, to whom he has a payment to make, who in his turn is as often content with a similar credit because he is satisfied that he can, whenever he pleases, either convert it into cash or pass it to some other hand, as an equivalent for it, and in this manner the credit keeps circulating, performing in every stage the office of money, till it is extinguished by a discount with some person who has a payment to make to the bank, to an equal or greater amount. Thus large sums are lent and paid, frequently through a variety of hands, without the intervention of a single piece of coin."

A bill was introduced, in accordance with Hamilton's suggestions, for the creation of the first United States Bank, to be located in the city of Philadelphia. This bill met with strenuous opposition from the "strict constructionists." Madison

Hamilton's Report, 1790 was the leader of the opposition in the House, his main objection to the measure being "That the power of establishing an incorporated bank was not among the powers vested in Congress by the constitution." But in answer to this, Hamilton expounded the doctrine of implied powers, claiming that the power to create a bank was clearly implied from the express power given Congress by the constitution. The bill became a law on February 25, 1791. Its chief provisions were:

1.     The bank was to have a capital of $10,000,000, divided into 25,000 shares of $400 each. Eight millions of the capital stock were open to subscriptions by the people, one-fourth to be paid in specie and three-fourth in government bonds. The remaining two millions were to be subscribed by the government, payable in ten annual installments.

2.    Each stockholder could cast one vote for one share of stock, one for the next ten shares, etc., but no shareholder could cast more than thirty votes. Foreign stockholders could not vote by proxy, and thus were practically prohibited from voting, the object being to prevent the bank from being controlled by a few individuals or by foreigners.

3.     The bank was to be managed by twenty-five directors, all of whom must be citizens of the United States.

4.     The bank could lend money on real estate security but could not hold title to real estate except temporarily, until it could be properly disposed of.

5.     The bank could issue circulating notes to the amount of its capital stock. These notes were receivable for public dues as long as they were payable in gold and silver coin.

6.     The head of the treasury should have the right to inspect all accounts of the bank except depositors' accounts, and could call for reports weekly if he desired.

7.     The directors could establish branches as they chose for the purpose of deposit and discount.

The First United States Bank

8. The bank's charter was to run twenty years, and the government pledged itself to grant no other charter for a like institution during that period.