Chapter Sixteen
THE CREATURE COMES TO AMERICA The story of the Bank of North America, the nation's first central bank, which was formed even before the Constitution was drafted; the story of the First Bank of the United States, the nation's second central bank, which was formed in 1791; the massive inflation caused by both banks; the causes of their demise.
It is a surprising fact that the United States had its first central bank even before the Constitution was drafted. It was chartered by the Continental Congress in the Spring of 1781 and opened its doors the following year. There were great expectations at that time that the province of Canada would soon join the rebel colonies to form a union extending across the entire North American continent. In anticipation of that, the new financial institution was called the Bank of North America. The Bank was organized by Robert Morris, a member of Congress, who was a leader of a group of politicians and merchants who wanted the new nation to imitate the mercantilism of England. They wanted high taxes to support a powerful, centralized government, high tariffs to subsidize domestic industry, a large army and navy, and the acquisition of colonial outposts to expand into foreign lands and markets. He was a wealthy Philadelphia merchant who had profited greatly from war contracts during the Revolution. He had carefully studied the secret science of money and, by 1781, was widely considered to be the