When the national government was organized in 1789 there were but four banks in the whole country. Alexander Hamilton, secretary of the treasury, and others recognized the need for a banking institution to assist the government in handling the public debt and in transmitting government funds from one section to another. Accordingly, in 1791 Congress and the President (Washington) chartered the first United States Bank, giving it, as far as the national government was able, a monopoly of banking for a period of twenty years. The capital stock was fixed at $10,000,000, of which the government was to own one-fifth. At the end of twenty years, when Congress refused to renew its charter, the bank went out of existence.

During the next five years the banking business of the country was carried on by state banks - that is, banks operating under state authority. By 1816, however, it had become apparent that another United States Bank was necessary to provide a uniform and sound currency and to assist the government in handling the public debt created by the Second War with England (War of 1812). Accordingly, Congress and the President (Madison) chartered the second United States Bank. The life of the new institution was twenty years; and its capital stock was $35,000,000, one-fifth of which was to be owned by the government. Besides issuing notes, the second United States Bank served as a depository for public and private funds, bought and sold domestic and foreign exchange, and made loans to business men. As yet the practice of using bank checks was confined to a relatively few. The bank, after getting a bad start, became prosperous and fulfilled the expectations of its supporters and friends. Unfortunately, it was drawn into politics about 1830. In 1832, Congress passed a bill re-chartering the bank, which President Jackson vetoed. The next year the government ceased to use the bank as a depository for public funds. At the expiration of its charter the second United States Bank became a state bank; and the second experiment of the United States in creating a large central bank was at an end.